Citadel Has Big Short Against Berkshire-Backed Chemical Maker
(Bloomberg) -- Warren Buffett and Ken Griffin's firms have taken opposing bets on a German chemical company.
Berkshire Hathaway Inc.'s subsidiary General Reinsurance AG said on May 29 it bought a 3 percent stake, worth about $200 million, in Lanxess AG. The same day, Citadel disclosed in a filing that it increased the hedge fund's short position on Lanxess by 26 percent to $150 million.
What do these two titans of investing see in Cologne-based Lanxess? On a price-to-tangible-book-value basis, a metric often cited by value investor Buffett, Lanxess is cheap. It trades at an 80 percent discount to the S&P 500 Chemicals Index.
The company is trying to become one of the world's biggest makers of flame retardants and lubricant additives. In May it bought Chemtura Corp., which had earlier purchased Great Lakes Chemical Corp. In 1999, Berkshire took a stake in Great Lakes, which was one of its least successful investments, according to a note from Jefferies Group. Still, Berkshire seems to have a fondness for additives -- it already owns Lubrizol Corp., a Lanxess competitor based in Ohio.
Ted Weschler, one of Buffett's deputy investment managers, has been doing a lot of work in Germany for Berkshire recently and has said publicly that he's looking for investment opportunities there. A Berkshire unit also agreed this year to buy Wilhelm Schulz GmbH, a closely held German maker of piping components.
While Berkshire tends to hold positions long-term, Citadel, which manages more than $26 billion, may be focusing on Lanxess's short-term challenges. On May 11, the chemical company said it anticipated its growth rates to slow in the second half after a strong performance in the Asia-Pacific region last year.
Shares of Lanxess, which surged to a four-year high on May 10, dropped 3.8 percent on the company's forecast. They jumped 8 percent on the May 29 news of Berkshire's investment and have since retreated a bit to 66.60 euros.
Spokespeople for Citadel and Lanxess declined to comment. Buffett didn't immediately respond to a request.
--With assistance from Noah Buhayar
To contact the reporter on this story: Brandon Kochkodin in New York at bkochkodin@bloomberg.net.
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Vincent Bielski, Katherine Burton
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
