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http://www.berkshirehathaway.com/2007ar/2007ar.pdf
The second category of contracts involves various put options we have sold on four stock indices (the S&P 500 plus three foreign indices). These puts had original terms of either 15 or 20 years and were struck at the market. We have received premiums of $4.5 billion, and we recorded a liability at yearend of $4.6 billion. The puts in these contracts are exercisable
Put contracts taken out between 2004 and 2007.
Of course, Sir Warren plays the game several ways: The puts also act as float for his other operations much as insurance does now.
But it does seem indicative that Sir Warren sees a very low risk in taking out long term puts even 15 or 20 years from now - historically he has never undertaken a money-losing operation solely for the sake of float.
Food for thought.
The other 3 indices? One absolutely is Europe. The other two - not Asia although perhaps China or more likely HK. I'd nominate Brazil as well - note that the index must be both large enough and liquid enough for these large transactions. Very possibly a commodity. Then there's Australia...
The second category of contracts involves various put options we have sold on four stock indices (the S&P 500 plus three foreign indices). These puts had original terms of either 15 or 20 years and were struck at the market. We have received premiums of $4.5 billion, and we recorded a liability at yearend of $4.6 billion. The puts in these contracts are exercisable
only at their expiration dates, which occur between
2019 and 2027, [...]
2019 and 2027, [...]
Put contracts taken out between 2004 and 2007.
Of course, Sir Warren plays the game several ways: The puts also act as float for his other operations much as insurance does now.
But it does seem indicative that Sir Warren sees a very low risk in taking out long term puts even 15 or 20 years from now - historically he has never undertaken a money-losing operation solely for the sake of float.
Food for thought.
The other 3 indices? One absolutely is Europe. The other two - not Asia although perhaps China or more likely HK. I'd nominate Brazil as well - note that the index must be both large enough and liquid enough for these large transactions. Very possibly a commodity. Then there's Australia...
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