dcvtss
Registered: Mar 2006
Posts: 242 |
11-07-09 04:32 PM
From an reuters article from earlier this year -
THE UNKNOWN
* Buffett has entered into 251 derivatives contracts, most
of which are essentially bets on the long-term direction of
stocks and junk bonds. He has said these contracts differ from
other derivatives he has called "financial weapons of mass
destruction" in part because of the billions of dollars of
premiums he collects upfront from counterparties. Berkshire has
four major types of contracts:
-- Berkshire has equity index "put" options tied to where
the Standard & Poor's 500, Britain's FTSE 100, Europe's Euro
Stoxx 50 and Japan's Nikkei 225 trade between September 2019
and January 2028. At year end, Berkshire had a $10.02 billion
paper liability on these contracts and said it could in theory
owe $37.13 billion if the indexes all went to zero.
-- Berkshire has contracts tied to credit losses in
higher-risk "junk" bonds between September 2009 and December
2013. At year end, Berkshire had a $3.03 billion paper
liability on the contracts and said it could in theory owe up
to $7.89 billion.
-- Berkshire wrote credit default swaps on $3.9 billion
of contracts covering 42 companies. At year end, Berkshire had
a $105 million liability.
-- Berkshire entered into tax-exempt bond insurance
contracts structured as derivatives. At year end, Berkshire had
a $958 million liability and $18.36 billion of potential
losses. Buffett said "we feel good" about the underlying bonds,
which are largely secured by states' taxing and borrowing
power.
Google is an amazing thing.
http://www.reuters.com/article/mnaN...043670220090430
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