Kass: Spitting Out the Wrigley News

These blog posts originally appeared on RealMoney Silver on April 28.

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Grantham Digs Deeper

7:23 a.m EDT

There are a number of modern day investors that I truly admire (all for different reasons):

• Berkshire Hathaway's BRK.A Warren Buffett for his patience, logic of argument and sense of a "margin of safety";
• Soros Fund Management's George Soros for his ability to aggressively press an investment thesis;
• Capital Growth Management's Ken Heebner for his capacity to isolate (and concentrate in) today's and tomorrow's market leaders;
• Fidelity Magellan's Peter Lynch (retired) for his adaptive, bottom-up approach to investing;
• Omega Advisors' Leon Cooperman for his work ethic and his thorough company knowledge (as he goes "belly to belly" with managements); and
• SAC's Steve Cohen and Steinhardt Partners' Michael Steinhardt (retired) for their trading acumen and ability to adjust to different market cycles.

In terms of providing a (written) sense of historical perspective and in expressing and weighing the current risks/rewards in the equity and fixed income markets, however, GMO's Jeremy Grantham has no peers.

Here is Grantham's first-quarter 2008 letter to investors. It is a great read and outlines far better than I can the potential risks facing equity investors over the next few years.

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What Exactly Did Buffett Buy?

9:02 a.m. EDT

The acquisition of Wrigley WWY is being funded by $11 billion from Mars, a $5.7 billion senior debt facility from Goldman Sachs GS and from $4.4 billion of subordinated debt from Berkshire Hathaway.

Berkshire has not apparently received equity in the entire Wrigley entity but rather will be purchasing a minority equity interest (for $2.1 billion) in a Wrigley subsidiary at a discount to the share price being paid to the shareholders of Wrigley.

With all the questions being bombarded on Buffett on CNBC just now, I would have liked a commentator to ask which subsidiary and why he didn't take a position in the entire company.

I would also add that the Wrigley deal supports some of my bearish rationale for being short Berkshire Hathaway, in that Buffett's ability to buy the type of world-class consumer franchise that has been his trademark (and at a reasonable price) has diminished based on the size of the Wrigley premium.