August 27, 2012

By 361 Capital, LLC

Warren Buffett's Berkshire Hathaway, Inc. BRKB +1.78% recently terminated about half of a big wager on the health of municipal debt, amid a worsening outlook for states, cities and municipalities across the country. Berkshire said on Friday, August 10, 2012 in its second-quarter financial filing will regulators that it reached an agreement to terminate contracts with a notional value of $8.25 billion, or about half the total outstanding. It didn't name the party on the other side of the deal or say when it reached the agreement, other than to say it came after June 30. The move effectively reduces Berkshire's exposure to defaults by state and local governments, many of which have been under intense budget pressure at a time of weak employment and soft housing prices, which have hit tax collections (Wall Street Journal).

Source: This article was excerpted from "Berkshire Trims Municipal-Debt Bet" by Serena Ng and Erik Holm, (The Wall Street Journal, August 3, 2012) via "Eurozone Events for Dummies", 361 Capital, LLC (Weekly Research Briefing, August 6, 2012) www.361capital.com.

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