Australian investment manager JB Global has launched a retail product that offers investors exposure to United States conglomerate Berkshire Hathaway, led by billionaire investor Warren Buffett.
The JB Global Berkshire Hathaway Income and Equity Accelerator places a percentage of investments in call options over Berkshire Hathaway’s B-class shares, JB Global said.
The remainder is put in a bond, which will grow to $1 per unit over the investment’s three-year term.
This provides capital protection, so if the market or Berkshire Hathaway falls in value the bond will hold the original value of investors’ capital, JB Global said.
Investors can borrow 100 per cent of the investment funds through a non-recourse loan provided by Bank of America at 4.95 per cent.
Interest can be prepaid and the minimum investment is $50,000. Redemptions in the product are available quarterly and investment coupons of up to 7.2 per cent are payable based on performance, JB Global said.
“This makes the investment suitable for self-managed superannuation funds, which are only allowed by law to invest in non-recourse leverage products,” the company said.
The JB Global Berkshire Hathaway Income and Equity Accelerator product is available from 22 February until 31 March 2010.
Buffett took control of Berkshire Hathaway, a struggling textile maker, in the 1960s and transformed it into a diversified conglomerate by snapping up businesses in sectors such as insurance, apparel and aviation.
Berkshire Hathaway also has substantial investments in companies including American Express, Coca-Cola, Wells Fargo, Goldman Sachs and General Electric.
In November 2009, Berkshire Hathaway acquired the largest US railroad operator, Burlington Northern Santa Fe, in a $29.65 billion deal which Buffett declared an “all-in wager on the economic future of the US”.
Berkshire Hathaway’s per share book value soared an overall 362,319 per cent from 1964 to 2008, compared with a total 4276 per cent rise in the S&P 500 Index of US large caps.
