How Berkshire Hathaway Inc. (BRK.A) Helped Rescue the Dow This Morning

Early this morning, things looked dire for the stock market. News from around the world led to rising concerns about the global economy as Japanese GDP fell for the third straight quarter and GDP within the European Union dropped by 0.6%. Yet as he has done so often in the past, Warren Buffett made a big investment that inspired confidence in stocks, and U.S. markets responded by eliminating their early losses. By 10:55 a.m. EST, the Dow Jones Industrials were back at breakeven, while broader benchmarks were similarly close to the unchanged level.

Berkshire Hathaway Inc.The big news from Berkshire Hathaway Inc. (NYSE:BRK.A) was its $23 billion bid for H.J. Heinz Company (NYSE:HNZ). Uncharacteristically, Berkshire made the deal with help from Brazilian private-equity firm 3G Capital, but given Heinz’s increasing exposure to emerging markets, having 3G in on the deal may help Heinz bolster its international strategy to maximize returns for Berkshire. Berkshire shares rose 1%, while Heinz soared exactly to the $72.50 per-share buyout offer amount.

Elsewhere, rural telecom stocks got hit hard after CenturyLink, Inc. (NYSE:CTL) announced yesterday that it would cut its dividend by 26% from an annual rate of $2.90 per share to $2.08. The company authorized a $2 billion repurchase program, but bond rating agency Fitch didn’t like the change in capital-allocation priorities, downgrading the stock to junk-bond status from its previous investment-grade rating of “BBB-.” CenturyLink’s stock fell 20%, and with the entire rural telecom industry relying on big dividends to entice investors, shareholders are clearly nervous about future prospects for their payouts.

Finally, Zillow Inc (NASDAQ:Z) soared 14.6% after seeing revenue surge 73% in its most recent quarter. Although Zillow is barely profitable, it has nevertheless done a good job in putting together a growing network of real-estate professionals and other users, and as the network effect grows, Zillow could have the best prospects in the industry to profit from its home sales, rental, and remodeling services.

The article How Berkshire Helped Rescue the Dow This Morning originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns shares of Berkshire Hathaway. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Berkshire Hathaway, H. J. Heinz, and Zillow. The Motley Fool owns shares of Berkshire Hathaway and Zillow.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!