Berkshire Hathaway (NYSE: BRK.A), the investment company of billionaire investor Warren Buffett, has offered to acquire the mortgage division and loan of portfolio of Residential Capital LLC.
Residential Capital, which is also known as ResCap, had filed for bankruptcy protection last month. ResCap is a subsidiary of Ally Financial Inc., which is the former auto lending unit of General Motors (NYSE: GM).
Berkshire Hathaway did not provide details on why it is interested in acquiring ResCap’s assets in the bankruptcy court filing. The investment company outlined why its offer is superior to competing bids. In the past, Buffett has said that he expects the U.S. housing market to recover.
According to Jeff Matthews, a BRK.A. shareholder and author of Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett, Buffett clearly thinks he is buying an under-valued asset.
Berkshire Hathaway already has some exposure to the mortgages. The company owns $2.8 billion in mortgage backed securities, which were acquired for $2.5 billion. It also owns Clayton Homes, a home builder with its own lending unit.
Meanwhile, Berkshire Hathaway’s newspaper division is buying a small Texas paper in the home of Texas A&M University.
Omaha World-Herald Co. said on Tuesday that it will buy the Bryan-College Station Eagle from Evening Post Publishing Co. The deal follows BRK.A’s acquisition of 63 newspapers from Media General (NYSE: MEG). Recently, the company also disclosed owning a 3.2% stake in Lee Enterprises Inc. (NYSE: LEE)
Separately, NetJets Inc., a Berkshire Hathaway company, signed a deal to acquire 150 new business jets from Textron’s (NYSE: TXT) Cessna Aircraft division.
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