Warren Watch: Con man’s condo a steal at $8.2M

Warren Buffett’s top property insurance man, Ajit Jain, bid $8.2 million and bought a New York City condominium formerly owned by scam lawyer Marc Dreier, the New York Daily News reported.

Dreier lived in the four-bedroom, 3½-bath, 3,000-square-foot condo on East 58th Street until he was sentenced earlier this month to 20 years in prison for a fraud that cost 13 hedge funds and three individual investors an estimated $740 million.

Bidding started at $3 million, and 45 people packed into Manhattan Bankruptcy Court for the auction.

Auctioneer Richard Maltz pointed out the condo’s 738-square-foot terrace overlooking the Queensboro Bridge, its silk Tibetan carpet and its 34th-floor view.

“You think I went too high?” Jain joked as he signed paperwork. “Right now, I’m having buyer’s remorse.”

Dreier paid $10.4 million for the condo, and a similar-sized apartment in the 55-story building recently sold for $12 million.

Dreier, nicknamed “Mini-Madoff” after $65 billion swindler Bernie Madoff, left behind a photo of himself with singer Diana Ross, seven pairs of black Ermenegildo Zegna shoes and a bottle of Laurent-Perrier Cuvée Rosé Brut Champagne.

His victims will share the proceeds from the auction.

Book on Doris

A biography of Buffett’s sister Doris is in the works, theExaminer.com reported.

The author is Mike Zitz, a former newspaper reporter who once rented a house from Doris Buffett, 81, near her home in Fredericksburg, Va.

Her Sunshine Lady Foundation gives away millions of dollars to charities. Zitz was making a modest salary and told Doris that he could afford only $500 a month, even though she likely could have rented it for more.

She agreed but said, “Here’s the deal.” He had to let her use one of the bedrooms when she was in town. He lived there for two years, and the two have stayed in touch.

He pitched a book to her, and her brother and rock star Bono, a family friend, urged her to agree.

“She wanted to give me the chance,” Zitz said.

He hopes to finish the book by the end of the year and publish it next spring.

He already has a title: “Here’s the Deal.”

Smart guy

Berkshire Hathaway Inc. last week sold 8 million of its 48 million shares of Moody’s Corp., the financial rating company, receiving $217.6 million and cutting its ownership of the company to 17 percent from 20 percent.

Moody’s share price was as high as $45.77 in May 2008 but dropped to $15.63 on Nov. 20, 2008. It has traded in the $25 to $30 range since April. Berkshire’s sales averaged about $27 per share.

Berkshire didn’t give a reason for the sale, and CEO Buffett doesn’t comment on investment decisions.

The sale caused Moody’s stock price to dip last week. Moody’s made headlines in March when it downgraded Berkshire’s financial rating slightly, a move that rankled Buffett.

At Berkshire’s annual shareholders meeting in Omaha in May, Vice Chairman Charlie Munger reassured Buffett that Moody’s would revise its view because Berkshire deserves to keep its AAA rating and the people at Moody’s are smart.

At the time, Buffett noted that when he and Munger disagree, Munger often says: “Eventually you will agree with me because I am right and you are smart.”

Taken down

Buffett, Bill Gates, President Barack Obama and Nobel laureate Tsung-Dao Lee are — or were — featured in billboards for a new apartment complex in Xi’an, a city in the Shaanxi Province of China, the publication Oriental Guardian reported, according to Web site Danwei.org.

Four 35-by-20-foot billboards show each “spokesperson” with a quote in English and Chinese. For Buffett, the quote is: “This is the most important investment in my life,” although there’s no evidence he’s buying into the Ivy Garden development.

Obama’s “quote” is: “The values upon which our success depends have never changed.”

The newspaper reported that a government bureau decided it was illegal to show a foreign leader in a Chinese advertisement and ordered the billboards torn down.

‘Party M’

An unconfirmed report by Bloomberg News said that Berkshire offered $1.7 billion in cash for Bermuda-based reinsurer IPC Holdings Ltd. earlier this month.

Quoting two unnamed people with knowledge of the bid, Bloomberg said Berkshire is the “Party M” named in a regulatory filing about the sale.

That bid was rejected in favor of a lower stock-and-cash offer from Validus Holdings Ltd. because Party M demanded that IPC not pay a third-quarter dividend. The filing identified Party M as “a global insurance and reinsurance company.”

Good deal?

Did Buffett get a better deal on his investment in Goldman Sachs than the federal government?

Rep. Marcy Kaptur, D-Ohio, was grilling former Treasury Secretary Henry M. Paulson Jr. recently and said it looked like “some very rich people are now profiting” from the bailout Paulson pushed last fall, the New York Times reported.

Berkshire invested $5 billion in Goldman and receives a 10 percent annual dividend, plus warrants giving it the right to buy Goldman stock at $15 per share. With Goldman’s latest stock price, the Berkshire warrants are worth about $2 billion, so far on paper because Berkshire hasn’t cashed them in.

On Fox Business Network, Buffett said:

“We’re getting almost $1,000 a minute on preferred stock investments, so I try not to answer the phone if I think Goldman’s calling. ... Every instinct in my body tells me that we will want to hold those warrants until they’re very close to their expiration date. The preferred pays us the dividend, and the warrants are going to make us the money.”

The federal Troubled Asset Relief Program invested $10 billion in Goldman. Paulson replied that Goldman needed capital at a time when it wasn’t otherwise available at reasonable rates.

“You do not stop a financial panic by offering capital to banks at the only terms available in the middle of a crisis,” he said.

Goldman repaid the government’s investment last month, plus $318 million in dividends and $1.1 billion for stock warrants, the Associated Press reported. Goldman said the total return to the government from the transactions, figured at an annual rate, was 23 percent.

NetJets

NetJets, the fractional ownership aircraft subsidiary of Berkshire, and First Data Corp., which has major Omaha operations, were among 15 businesses receiving the 2009 Secretary of Defense Employer Support Freedom Award for supporting employees in the National Guard and Reserves.

Employees of NetJets, based in Woodbridge, N.J., and First Data, headquartered in Denver, were among a record 3,200 Guard and Reserve members or family members who nominated their employers for the award.

Contact the writer:

444-1080,steve.jordon@owh.com

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