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Friday, March 02, 2007

Buffett 2006 Letter

The 2006 annual letter from Berkshire Hathaway Chairman Warren E. Buffett makes an interesting read (Tell me something new!!!)

I was attracted to where he explains about the Equitas deal where Berkshire re-insures Equitas against upto $13.9 billion claims for securities and cash of $7.12 billion. Assuming the 10.4% return of S&P 500 as laid out in the letter, they will break-even in 6-7 years and changing the return to 21.6%, the break-even would be in 3-4 years. In Buffett's estimate, the payout period for the $13.9 billion is as long as 50 years. Just one word to describe the deal - ingenious!!!!!!!!!!!

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