DealZone

Did the Oracle just blink?

It may have only been about two percent of his holdings in the rating agency, but Warren Buffett’s decision to pare back his stake of Moody’s smacks of capitulation after a Manhattan judge ruled that just because they write opinions does not necessarily afford the much-maligned credit grading industry first-amendment protection.

Buffett‘s Berkshire Hathaway said in a filing it had sold 794,388 Moody’s shares on Sept. 1 and Sept. 2, chiseling its holding down to 39,219,312 shares. This isn’t the first time the Oracle of Omaha has seen fit to shave his share of the rating agency. Many will say these incremental measures are not a signal of a loss of faith in the business. But one could argue that the small sales serve less of a financial purpose than they signal slipping confidence. Even Buffett has said Moody’s damaged its brand by providing inaccurate ratings of SIVs, CDOs, CDSs and ETCs — the acronyms of mass financial destruction in the markets’ meltdown.

U.S. District Judge Shira Scheindlin in Manhattan said ratings on notes sold privately to a “select” group of investors were not “matters of public concern” deserving of traditionally broad protection under the First Amendment of the U.S. Constitution. Shares of both Moody’s and McGraw-Hill, which owns Standard and Poor’s, slid in response.

Buffett may yet sense a brighter day on the horizon once the lawsuits are settled. Bond market investors can’t really do without rating agencies, so any improvements to their ability to spot and give appropriately poor grades to cruddy paper could spark a quick turnaround in rating agencies’ fortunes.

Omaha bowling alley seeks a bargain; no one likely fooled

Chops BowlingOmaha, Nebraska is always a beehive of activity when devotees flock here for the annual meeting of billionaire Warren Buffett’s Berkshire Hathaway.

Shops and restaurants were doing a brisk trade on Friday. Waiters at La Buvette Grocery and Wine Bar, a bistro in the gentrified old market area, said this week-end is always one of the busiest of the year. The rest of Omaha’s old market was also jamming.

At least one vendor — this one on the outskirts of the city — was looking for more than a good day’s business.

Simply, Buffett

Warren BuffettWhat’s one of Warren Buffett’s advantages in this environment, when credit is tight, markets are in disarray and deals are so difficult to do?

Simplicity, apparently.

The famed investor gave a financing commitment letter that was just two-and-a-half pages long in the Mars-Wrigley deal, said Timothy Ingrassia, Goldman Sachs’s head of mergers in Americas.

Compare that to deal contracts that average about 90 pages these days and commitment papers that run into hundreds of pages, Ingrassia said during a panel discussion at a Practising Law Institute seminar on M&A in New York.

Meanwhile, Back in Ohio

goldman.jpgThe Wall Street Journal reports National City is in talks with a number of banks about a possible sale. It says Pennsylvania’s PNC Financial Services and Toronto-based Bank of Nova Scotia are among the potential bidders. In late September, NatCity said it had no need or plan to raise capital. A lot has changed since then.
 
In July, Merrill Lynch analyst Guy Moszkowski speculated that Wall Street giant Goldman Sachs would buy a deposit-taking bank to help it fund its businesses. By the fall, Goldman was no longer an investment bank at all, opting to become a deposit-taking bank holding company under heavy pressure from the Fed and the Treasury.
 
Goldman has been National City’s financial advisor, so there is a relationship to work on. Mozkowski said it was clear Goldman had considered a move to buy an old-world bank, but that it was not likely to go for it over the summer. Now Goldman has a big mid-western partner in the form of billionaire, Warren Buffett, who bought a $5 billion chunk of the Wall Street titan. It’d be interesting to see what the oracle of Omaha thinks about such a deal. If nothing else, trading at $2.23 a share on Wednesday, it’s not like they would be getting fleeced. 
 
But Ohio is one of the hardest hit of the Midwest states suffering from the economic malaise, and so may be one of the last to see any traction in a bank recovery. It may take incentive beyond National City’s low stock price to tempt a buyer. 

* ING Direct, the online banking arm of ING Group, said it is acquiring more than 3 billion pounds ($5.3 billion) worth of British deposits from Icelandic online savings providers icesave and Kaupthing Edge.

* Oil and gas exploration company Denbury Resources said it shelved its $600 million Conroe Field acquisition due to turbulent capital markets, even as it enhanced its bank credit line and trimmed its 2009 capital budget to preserve liquidity.

Before the Bell: Buffett’s ball

buffett-bridge.jpg

There’s nothing like a belle to bring a festive mood to an otherwise gloomy ball, and today that honor belongs to Goldman Sachs, which has drawn attention – and money – from none other than Warren Buffett.

Stock futures are pointing up on news of the uber-investor’s plan to purchase a $5 billion stake in the bank. And Japanese media say that Sumitomo Mitsui Financial Group is also looking to buy in.

But the fate of the Wall Street bailout plan remains the $700 billion question. Congress is continuing discussions today, with Fed chief Ben Bernanke testifying before the House Financial Services Committee.

Wagging the dog

Follow Carl, from the Good Dog, Carl series of Classic Board Books published by Farrar, Straus & Giroux, 1989Yahoo has struck an advertising partnership deal with WPP Group that will let WPP units GroupM and 24/7 Real Media buy ads on Yahoo’s online ad exchange. Yahoo said the deal would first involve WPP units GroupM and 24/7 Real Media. It may be a stretch to expect this shake off the dogs of war unleashed by Carl Icahn, who is trying to unseat the Yahoo board for its failure to deal with a $47.5 billion unsolicited takeover bid from Microsoft. If the ad tie-up deal with Google that’s still in the trial phase hasn’t done so, why would a deal with WPP? But at the same time, Yahoo CEO Jerry Yang can hardly be seen to be sitting on his hands.

Warren Buffett’s Berkshire Hathaway has pulled out of the bidding in Royal Bank of Scotland‘s 7 billion pound ($13.62 billion) auction of its UK insurance business, according to the Financial Times. Berkshire told the FT it had looked at the business, which includes the insurers, Direct Line and Churchill, but had decided not to bid, without giving a reason.

Japan’s Bridgestone said it was forming a strategic alliance with rival Toyo Tire & Rubber aimed at coping with high materials prices and intensifying competition. The two companies plan to team up in developing advanced tire technology and procuring raw materials. They will also use each other’s production facilities and said they would take stakes in each other worth 8 billion yen ($76 million).

Warren Buffett (or his evil twin) to appear on All My Children

buffett-lucci.jpgWhen you’re embroiled in an insider trading scandal and have been unfairly labeled a fugitive, who you gonna call?

Warren Buffett!

The Sage of Omaha is set to appear for a second time on the soap opera mainstay “All My Children,” coming to the aid of the character Erica Kane.

Buffett will play himself in an episode set to air during the May sweeps, following his first appearance on the show in 1992. Buffett and the creator of “All My Children,” Agnes Nixon, are friends, and the investment magnate is a fan of the show, said an “All My Children” spokesman.