{"id":332109,"date":"2010-02-17T13:02:00","date_gmt":"2010-02-17T18:02:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-3935941462624084470"},"modified":"2010-02-17T13:07:01","modified_gmt":"2010-02-17T18:07:01","slug":"the-australian-buffett-fans-plan-for-oracle-fund","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/332109","title":{"rendered":"THE AUSTRALIAN: Buffett fan’s plan for Oracle fund"},"content":{"rendered":"

\"\"<\/a>Michael BennetFrom:<\/span> The Australian<\/span>
February 17, 2010<\/span> 12:00AM<\/span><\/p>\n

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BILLIONAIRE investor Warren Buffett has had no shortage of fund managers attempt to imitate his strategies. <\/strong> <\/p>\n

But why try to replicate when you can invest directly in the “Oracle of Omaha” via his company Berkshire Hathaway, argues JB Global chief executive Justin Beeton.<\/p>\n

Mr Beeton, a fan of Mr Buffett since the age of 14, will next week launch a new fund through his Sydney-based investment house to solely invest in the billionaire’s New York Stock Exchange-listed company.<\/p>\n

JB is looking to raise at least $40 million by the end of next month to cover costs after Mr Beeton and fellow staff kicked in the initial minimum of $10m.<\/p>\n

Mr Beeton expects the JB Global Berkshire Hathaway Income & Equity Accelerator fund to be more popular than the company’s other fund — an ASX 200 vehicle in its fourth series — that recently raised $120m.<\/p>\n

“I’ve spoken to a few financial planners that we deal with and they’re all extremely keen as it’s the first time their clients can gain exposure to Buffett without currency risk and — just in case the bloke dies — any capital risk,” Mr Beeton said.<\/p>\n

Berkshire’s A-class shares trade at about $US115,000 ($128,417) a share, but Mr Buffett late last month split the company’s B-class shares, also known as “Baby Bs”, 50 to one to make them more accessible to retail investors.<\/p>\n

It is these more liquid Baby B’s, which trade around $US75, that JB plans to invest in through tailored over-the-counter options.<\/p>\n

Mr Beeton, who formerly worked in capital protection at Macquarie, said the fund would give retail investors access to an investment normally out of reach and have capital protection measures built in.<\/p>\n

“In the past I’ve probably fallen victim, like the majority of fund managers who try to replicate Warren Buffett, but why try and replicate when I can buy his shares and get the same deals he does?” he said. “Berkshire Hathaway hasn’t gone up anywhere near as much as its portfolio has so I believe it’s trading well below its intrinsic value.”<\/p>\n

Investors can borrow 100 per cent of a minimum of $50,000 through a non-recourse loan facility provided by Royal Bank of Scotland, with $7500 in pre-paid interest to be paid up-front.<\/p>\n

Mr Beeton said the loans would be capital protected by Merrill Lynch, the fund would be re-weighted to cash when volatility was high and redemptions paid out in Australian dollars to reduce currency risk. “It’s huge leverage, you’re talking 100 per cent leverage, which gives you a lot of upside and because of the capital protection, you don’t get the negative,” he said.<\/p>\n

In return, JB will take a 1 per cent up-front fee of the total funds under management and a 10 per cent performance fee.<\/p>\n

“We don’t think our clients mind paying when we’re providing performance. With no real performance I can’t really justify any fees because I’ve added no value,” he said.<\/p>\n

JB plans to launch a similar fund to invest in Chinese infrastructure and property in June.<\/p>\n

“Throughout Asia I think the best allocation of capital is in that space,” he said.<\/p>\n


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