From AP News:

The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.

Warren Buffett has secured another great deal during this major financial turbulence by investing $5 billion in Goldman (GS) preferred shares, which have 10% dividend yield. On top of that, Berkshire (BRK.A) also will get warrants granting it the right to buy $5 billion of Goldman common stock at $115 a share, which is 8% below the 4 p.m. closing share price Tuesday of $125.05. At Goldman's roughly $50 billion market value, based on that closing price, exercising those warrants would give Berkshire about a 10% stake in Goldman.

So, what are the important lessons that we could learn from Buffett:

On July 21 2008, I posted my write-up on A.H. Belo (AHC), stating why I thought A.H. Belo was mispriced. The share was trading at $5.83 at that time. Now, two months later, the price has reached $7.07, which is an increase of 21.3%, or an annualized rate of 127.6%.

Although I still believe that A.H. Belo is mispriced and has more upside than downside, I have sold off my stake in A.H. Belo. My primary reason is because A.H. Belo is in a very difficult business and the situation might get worse over time. With the current market volatility, several significantly better companies, with a strong cash flow have become very attractively priced. It would be prudent for me to "upgrade" to better quality companies.

Warren Buffett’s ability to act swiftly in buying Constellation Energy Group (CEG) for $4.7 billion is truly amazing. At the beginning of the year, Constellation traded for over $100 and its shares had slumped below $25 prior to Buffett’s acquisition announcement. At a $26.50 take-over price, Buffett is paying about an $11.5 billion price tag for Constellation, including net debt and retirement obligation. LTM EBITDA: $1,925 million, which means Buffett paid less than 6 times EBITDA for Constellation. By the way, property, plant and equipment [PPE] are worth $10.4 billion alone.

The great lessons from Buffett and Munger are:

It is fascinating to see HBOS be acquired by Lloyds (LYG), which is only half its size! In my humble opinion, the British government might have played a key role in this deal to avoid another Northern Rock (NHRKF.PK)-like nationalization. However, I'm not sure whether this is a smart move or not.

• Lloyds has total assets of £367.8 billion and net tangible equity of £8.54 billion. Leverage of 43 to 1.
• HBOS has total assets of £681.4 billion and net tangible equity of £18.32 billion. Leverage of 37 to 1.

These two institutions are as leveraged as one can be. How much can a much-leveraged, yet smaller bank help a larger one, i.e. can Lloyds "rescue" HBOS?

It is incredible that AIG (AIG) gets taken over by the U.S. government as credit dries up. I want to share with you what Warren Buffett said at Berkshire's 2008 annual meeting:

Buffett: In fact, that was one of the interesting things that was said in testimony before the Senate finance committee. I think two of the witnesses (Bear Stearns) said: " We understood we couldn't borrow money unsecured if people started looking at us askance. But we never dreamed that we couldn't borrow money secured." Well we found that out at Solomonn 17 years earlier, when we were having trouble borrowing money secured. When the world doesn't want to lend you money, 10 or 20 or 50 basis points - or a bigger haircut on collateral - doesn't do much. They'll only lend you money if they want to lend you money.

Bill Miller has increased his stake in Freddie (FRE) and now owns 12.2% of the company. Besides Bill Miller, other smart managers such as Richard Pzena, Charles Brandes, David Dreman and others are long on FRE.

On the other hand, there are smart people like Bill Ackman, Whitney Tilson and others that short FRE.

The company announced a significant restructuring plan:

• Reduction of employees by 500 people, or 14 percent of work force, to eliminate $50 million of operating expense by 1st quarter of 2009.
• Reduction in capital spending by 10 percent. To maintain capital spending at $20 million per year for 2008 and 2009.
• Disposal of non-core assets, which potentially could fetch $35 million. The current operating losses would save capital gain tax.
• Reduction in dividend payout for 2009, which is still under discussion.

In my opinion, management is taking rational steps towards coping with current difficult environment, which might be a chronic situation.

• EV = Enterprise value; EBITDA = Earnings before interest, taxes, depreciation and amortization; NTA = Net tangible asset; IRR = Internal rate of return.

Investment Thesis

Bel-Oro International and Aurafin to be Acquired by Berkshire Hathaway (May 18, 2007)

• FTAR operates footwear departments in 1,392 Kmart stores as of Dec 30, 2006.
• March 2, 2004: FTAR filed for Chapter 11.
• Feb 2, 2006: FTAR emerged from bankruptcy and repaid creditors in full with interest.
• Amended Master Agreement with Kmart will expire at the end of 2008. Kmart is obligated to purchase shoemart inventory (but not the brands) at book value.

Liquidation Value (Based on 2006 10K)

Microsoft's profit and revenue both rose 11% in its fiscal first quarter.

"Office 2007 and Vista actually should be a catalyst for growth not in those two divisions but also a catalyst in the server and tools division," said Steve Ballmer, Microsoft's chief executive, in an interview this week. "We get to sell a whole different sort of combined business value."

Yesterday's announcement sent Wal-Mart's shares climbing more than 5% during the day before closing up $1.91, or $3.9%, at $51.28 in 4 p.m. New York Stock Exchange composite trading, a new 52-week high.

In recent years, Wal-Mart has expanded the square footage of its global portfolio of stores at a consistent 8% clip, translating this year into as many as 615 new stores, including 332 to 340 in the U.S. That relentless expansion, coupled with the appeal of Wal-Mart's low prices, has made Wal-Mart one of the most dominant retailers in history, accounting for 2% of the nation's gross domestic product.

"Pfizer needs to be realistic about its operating environment, embrace necessary changes and turn them to our advantage, for the benefit of our shareholders and everyone with a stake in our future," said Chief Executive Officer Jeffrey B. Kindler.

The company said it expects its restructuring program to yield savings of about $2.5 billion this year, $500 million ahead of earlier projections.

Revenue climbed 6.9% to $6.45 billion from $6.04 billion.

Coke repurchased $1.2 billion of its stock year-to-date and currently intends to repurchase a total of $2.0 billion to $2.5 billion of its stock for the full year.

It is interesting to note that book value per share increased from $47.31 to $50.85 from Dec. 05 to Sept. 06, an increase of 7.48%.

Thus, MTG is on track to achieve better book value per share growth than I had conservatively predicted (8.5% per annum) in my previous analysis.

The following is an analysis of The Buckle Inc. (BKE), a Nebraska-based casual clothing retailer.

Do you understand The Buckle Inc.’s business?

Step 1: Do you understand MTG’s business?

MGIC Investment Corporation is a holding company, which through its wholly owned subsidiary, Mortgage Guaranty Insurance Corporation, provides private mortgage insurance (PrivateMI) in the United States to the home mortgage lending industry.

So, does this come as a surprise? No. Not for me at least.

Why?

Wall Street, for the most part, has turned a deaf ear, betting that Lampert will turn Sears Holdings Corp.'s massive real estate holdings into cash.

Perhaps he will, eventually. But one prominent real estate investor isn't waiting around to find out.