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.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

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!