Buffett may lose $34-mil on Value Capita hedge fund
Value Capital LP, a $570 million hedge fund backed by billionaire investor Warren Buffett, may report an annual loss for the first time in seven years after making a bad bet on U.S. interest rates. The miscalculation cost Buffett's Berkshire Hathaway (86,800,-1200,BRK) $34 million before taxes in the first nine months of 2005, according to a Nov. 4 filing with the SEC. Berkshire Hathaway had $3.4 billion in net income over the same period. Mark Byrne, who runs Value Capital, said he erred by anticipating that long-term borrowing costs would rise faster than short-term rates as the U.S. economy strengthened. Instead, the gap between 2-year and 10-year bond yields narrowed by more than 1 percentage point to the smallest since January 2001, as the Federal Reserve raised the overnight bank lending rate 12 times.
The Bozo from Nebraska wrong? Say it ain't so!!