Buffett’s Berkshire Converts Notes Worth $56 Mln into Shares of USG Corporation (USG)

Warren Buffett‘s Berkshire Hathaway redeemed an aggregate of $56.17 million worth of Convertible Senior Notes of USG Corporation (NYSE:USG), shortly after the latter announced its Notice of Redemption. The fund now owns 47.78 million shares of the company, increasing the ownership by 4.93 million shares outstanding, after the conversion. The Notes were converted into 87.7193 shares per $1,000 principal amount of Notes, based on a conversion price of $11.40 per share.

Berkshire Hathaway

Earlier this year, Buffet revealed holding 30.5% of USG’s Stock. The stake was increased also through conversion of 0% Contingent Convertible Senior Notes due 2018.

Also known as United States Gypsum Corporation, USG Corporation (NYSE:USG) is a leading US manufacturer of building materials such as joint compound, ceiling grid, and drywall. Among USG’s most significant brands are FIBEROCK Brand Panels, SECUROCK Brand Roof Board, and SHEETROCK Brand gypsum wallboard. In 2006 USG announced a reorganization plan to emerge from bankruptcy, paying  asbestos personal injury claims with cash it had accumulated during the 5 years in which it was bankrupt. In 2013, the company generated net income of almost $50.00 million, with respective earnings per share of $0.67, exceeding analyst estimates by 22.00%, while this year USG is expected to produce earnings of $1.93 per share. Currently, analysts strongly suggest that investors buy the company’s stock.

Managed by Phill Gross and Robert Atchinson, Adage Capital Management holds 2.48 million shares of USG Corporation (NYSE:USG), the position worth $70.52 million. Another large shareholder of USG is David E. Shaw‘s investment management firm D E Shaw, with a holding of 1.06 million shares worth $30.21 million.

Berkshire Hathaway recently disclosed that it would sell its Class B shares of Graham Holdings Co (NYSE:GHC) back to the company in exchange for cash,  shares of Berkshire Hathaway Inc. (NYSE:BRK.A) owned by Graham, and WPLG – a Miami-based television station. More than half of Berkshire’s equity portfolio is concentrated in the Financial and Consumer Goods Sectors. Approximately 20.00% of the portfolio is represented by a large investment of $21.04 billion in 463.46 million shares of multinational banking and financial services holding company Wells Fargo & Co (NYSE:WFC). Berkshire also holds 400.00 million shares worth $16.52 billion in The Coca-Cola Company (NYSE:KO).

Disclosure: none

Recommended Reading:

Hedge Fund News: Warren Buffett, Kyle Bass & Ray Dalio

Berkshire Partners’ Subsidiary Stockbridge Partners Surges Stake in RealPage, Inc. (RP)

Phil Falcone’s Hedge Fund Sells 23 Mln Shares of Harbinger Group Inc (HRG)

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