Monday, April 28, 2008

Items of interest

Nassim Taleb, Kevin Phillips, Warren Buffett, and Jeremy Grantham. These are just some of the subjects (and authors) of today's wrap-up of recent news, articles, and interview features.

There's a lot of great stuff here that I couldn't fit into last Friday's "Features" post, and some very recent posts and news items found in the last 24 hours (including news of the Berkshire Hathaway-financed Mars-Wrigley deal). We'll provide a quick summary of each item; the rest is up to you!

1. Mars, Buffett to buy Wrigley for $23 billion. Berkshire Hathaway will help finance Mars' buyout of Wm. Wrigley Jr. Co. at $80 per Wrigley share. Excerpt from the MarketWatch piece:

"Wrigley will become a stand-alone, separate Mars subsidiary, in which Buffett's Berkshire Hathaway (BRKA) (BRKB) will make a minority investment, Mars said.Specifically, Berkshire Hathaway will make a $2.1 billion equity purchase in Wrigley. It will be bought at a discount to the share price being paid to the company's shareholders."

Note that Forbes' coverage of the deal highlights Wrigley's limited exposure to increased costs from higher agricultural commodity prices. A key selling point for Buffett and friends?

2. Warren Buffett chats with CNBC about the Mars-Wrigley deal and the "Main Street recession".

3. Fear of a Black Swan. Nassim Taleb talks to Fortune about why Wall Street fails to anticipate disaster. Interview excerpt:

"I worked on Wall Street for close to two decades in trading and risk management of derivatives. I noticed that while portfolio models got worse and worse in tracking reality, their use kept increasing as if nothing was happening. Why? Because in the past 15 years business schools accelerated their teaching of portfolio theory as a replacement for our experiences. It looks like science, and they have been brainwashing more than 100,000 students a year."

Very interesting. Check this one out.

4. Details on Jeremy Grantham's latest quarterly GMO commentary, "Immoral Hazard", from The Big Picture. The entire GMO letter is available here in PDF format.

5. Another great thing that Barry (Big Picture) tracked down was the full online version of Kevin Phillips' recent article, "Why the Economy is Worse than We Know", in the May 2008 issue of Harper's Magazine.

You may recall our earlier post on the Phillips piece, and the related Financial Sense Newshour interview with John Williams of Shadow Statistics. Be sure to check out both.

6. Investor David Dreman gives a nice, concise explanation of the ongoing financial crisis in this Forbes piece, entitled, "Looking Beyond the Bailout". Just be careful of possible value traps in some of those financial shares!

You're up to date! Have a great start to your week.