Street Capitalist: Event Driven Value Investments

A few months ago the Financial Times proclaimed that we are now in an environment where Warren Buffett thrives in and that he had his elephant gun out and was ready for acquisitions. What is most interesting though is looking at what he hasn’t done. When news of the potential Bear Stearns acquisition came out, I blogged that it was not likely at all that he would be involved. Then there was the talk about bond insurers, but rather than acquire one, Berkshire chose to start their own.

Finally though, we’re seeing what looks like a potential acquisition:

Mars Inc. and Warren Buffett’s Berkshire Hathaway Inc. were close to a pact to acquire Wm. Wrigley Jr. Co. for more than $22 billion, according to people familiar with the matter, in a deal that would remake the global confectionary landscape.

Mars, Buffett Team Up in Wrigley Bid (WSJ)

This is not the first time that Buffett has mentioned Wrigley either. He has always proclaimed an affinity for businesses with strong brands, and look at what he had to say in 1993:

Is it really so difficult to conclude that Coca Cola and Gillette possess far less business risk over the long term than, say, any computer company or retailer? Worldwide, Coke sells about 44 % of all soft drinks, and Gillette has more than a 60% share (in value) of the blade market.’ Leaving aside chewing gum, in which Wrigley is dominant, I know of no other significant businesses in which the leading company has long enjoyed such global power.

I sold my entire position in Esmark (ESMK) today and have added shares in one fertilizer company with a limit order still out on another. I’ll post those positions when I’m finished buying.

via The Economist

I posted this morning about the fact that commodities have risen quickly in just a few years, but that there seemed to be an indication that they would continue their appreciation due to actual demand reasons, rather than pure speculation. I feel like George Soros touches on this below:

Billionaire George Soros said the boom in commodities is still in a “growth phase” after prices for oil, wheat and gold rose to records.“You have a generalized commodity bubble due to commodities having become an asset class that institutions use to an increasing extent,” Soros said today at an event sponsored by the Centre for European Policy Studies in Brussels. “On top of that you have specific factors that create the relative shortage of oil and, now, also food.”

Soros Says Commodity `Bubble’ Still in `Growth Phase’ (Bloomberg)As someone who is primarily focused on finding undervalued companies, it can be a little tough to invest in the kinds of areas that seem overvalued but appear to have room for growth, such as agricultural commodities and fertilizer companies. The way I’m going about this is looking for some hidden or indirect plays at the trend, some of these are pretty illiquid and trade on the Pink Sheets/OTC so I can’t exactly name names until I’m finished doing my buying.