Yesterday Harley Davidson (ticker: HOG) jumped with 20%, slaughtering a lot of shorts. Even in a bear market, a shorter is not safe. News that Buffett came in with financing, ignited the short squeeze and drove the share price from 12 USD to 14 USD.
This is the reason we found:
Harley-Davidson Inc. said Tuesday it priced $600 million in new debt to fund motorcycle lending at its troubled financing unit. Berkshire Hathaway Inc., the company owned by billionaire investor Warren Buffet, and Davis Selected Advisers LP, the company's biggest shareholder, both agreed to purchase equal portions of the principal amount of the new debt.
Now Warren Buffet decided earlier to start buying distressed assets. He came in with financing for Goldman Sachs (ticker: GS) en General Electric (ticker: GE).
Both stocks have retreated since with 50%.
Why is Buffet a winner? Because these unsecured notes will carry an annual interest rate of 15%.
Wow, very nice terms indeed.
But not for the common shareholder.
This is the reason we found:
Harley-Davidson Inc. said Tuesday it priced $600 million in new debt to fund motorcycle lending at its troubled financing unit. Berkshire Hathaway Inc., the company owned by billionaire investor Warren Buffet, and Davis Selected Advisers LP, the company's biggest shareholder, both agreed to purchase equal portions of the principal amount of the new debt.
Now Warren Buffet decided earlier to start buying distressed assets. He came in with financing for Goldman Sachs (ticker: GS) en General Electric (ticker: GE).
Both stocks have retreated since with 50%.
Why is Buffet a winner? Because these unsecured notes will carry an annual interest rate of 15%.
Wow, very nice terms indeed.
But not for the common shareholder.
We see this as a potential set-up to short this stock.
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