March 12, 2009

AmInvestment Bank offers Berkshire warrants

A Malaysian bank offered securities that track Berkshire Hathaway Inc stock, allowing investors to bet on Warren Buffett’s company for a fraction of the price of the New York-listed shares.

AmInvestment Bank started selling so-called zero-strike warrants on Berkshire Class B shares in Asia’s first programme of its type, it said in a statement today.

For a minimum payment of 100 ringgit (US$27), investors can buy an asset listed in Malaysia that will mature in five years and reflect the performance of shares of the Omaha, Nebraska-based company.

“What we want to do is take something that is inaccessible, list it here, and make it something that people can buy,” Ng Ee Fang, head of equity derivatives at Kuala Lumpur-based AmInvestment, said in an interview.

“People are looking for alternative investments.”

A single lot of 10 Berkshire Class B shares costs US$27,400, more than four times the per capita income in Malaysia, according to data from the central bank.

Billionaire Buffett, who invested in Goldman Sachs Group Inc in the financial crisis, says buying opportunities are now appearing in the US after he scouted Europe for takeover targets last year, according to a Bloomberg Television interview aired today.

Berkshire has dropped 37 percent in the past 12 months. The benchmark Kuala Lumpur Composite Index lost 32 per cent in the same period.

The lots of 100 zero-strike warrants on Berkshire shares -- at RM1 each -- can be traded on the Malaysian stock exchange like conventional equities, said AmInvestment, which is a unit of AMMB Holdings Bhd., Malaysia’s fifth-biggest bank.

Ng said the Malaysian bank may increase its RM100 million
offering of the strikes if there’s sufficient demand. - Bloomberg

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