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Berkshire Municipal Bond Stake Doubles


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Bloomberg reports that BRK has doubled its stake in Municipal Bonds to $4.05 Billion by March 31 due to the high yields offered on them because of the massive underpricing of risk in Q3 of 2009 and Q1 of 2009.  The timing seems to have been good as the yield on Municipal Bonds subsequently fell.  See: "Berkshire Doubled Municipal Bond Stake on ‘Unthinkable’ Yields" at http://www.bloomberg.com/apps/news?pid=20601213&sid=acObar._Pgdg .

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Bonds (munis, corporates) were on pretty high yields last quarter, like 20%+. Whilst their risk was quite low aswell.

Additionally, I think with the bond markets WEB can just deploy way more capital than he can in the equities markets, the aforementioned bank holding rules being just one of the restrictions placed upon him.

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Its all relative, to you or I having 20 billion in cash is plenty of firepower.  Berkshire needs to keep holding cash,  I'm pretty sure if another Constellation type deal popped up he'd be comfortable bringing it down to 15, maybe even 10 billion.  Millions of lives depend on Buffett's allocating skills.  

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