Buffett sees subprime opportunities
NEW YORK (Reuters) - Warren Buffett, chief executive of Berkshire Hathaway (BRKa.N) (BRKb.N), sees some opportunities for investing in the subprime mortgage business, he told Reuters in an interview on Wednesday.
Buffett said Berkshire Hathaway had already made some subprime investments through its Clayton Homes manufactured housing unit.
Buffett, who is famous for investing in businesses in beaten-down industries, said he also sees indirect investments in this area through a municipal bond insurer Berkshire set up earlier this year.
As Buffett wades in, others are sure to follow. Some already have -- giant bond fund Pacific Management Co, a unit of Allianz SE (ALVG.DE), and Swiss insurer Zurich Financial Services (ZURN.VX) are among those trawling through distressed, subprime assets, looking for bargain price opportunities.
"We have bought some subprime paper in the open market, as people have wanted to sell portfolios," Buffett said of the investments Clayton Homes has made to date. Other investments are possible, he added.
"We listen to anything we hear about," said Buffett. "If it is big and unusual, and carries the proper premium, we listen."
And Buffett said Berkshire's monoline insurer may indirectly invest in some distressed areas, including subprime. "Some of that may be a factor in what we are doing in bond insurance -- it is an indirect fall-out from that," he said.
Buffett said last month that he was generally hoping to make big investment deals, "the bigger the better."
The subprime mortgage crisis has been the main driver of the credit market turmoil that has gripped worldwide markets since last year, and has led financial institutions around the globe to record losses and write-downs exceeding $300 billion.
Zurich Financial Services, which largely skirted these risky investments in the run up to the crisis, is now looking at investing in such distressed assets, said Chief Investment Officer Martin Senn.
"That is one asset class we are looking at, particularly indirectly through hedge fund (investments)," said Senn, in an interview earlier this month.
And Newport Beach, California-based Pimco, with about $128 billion in assets under management, has recently stepped up its holding of risky mortgage debt.
(Additional reporting by Dan Wilchins; Editing by Lisa Von Ahn and Tim Dobbyn)
