Warren Buffett, famed value investor and head of international bellwether Berkshire Hathaway, is rumored to be in talks to obtain a minority interest in investment firm Bear Stearns. The company, having suffered from the subprime lending disaster, had seen its stock pounded after several of its hedge funds collapsed. The latest word on the street is that Buffett sees value in the company at its current price, and may join the ranks of Bank of America and Wachovia in buying a minority stake in the firm.
However, many also believe that this is pure speculation - hedge funds and highly leveraged investments aren’t exactly Buffett’s cup of tea. Remember the most important rules of value investing:
- Never lose money
- Always refer to rule #1
Unfortunately, Bear has already broken them both. I’m not sure the rumor is really true, but I suppose we’ll see in the months to come. Buffett has certainly surprised us before.