Dow Chemical to Redeem Cash-Draining Preferred Stock Held by Buffett

Comments: Mr Buffett cleans the house, pocketing $8 every second.

Dow Chemical Co. finally gained the right to convert $4 billion of preferred stock into common shares, ridding the company of an expensive burden and depriving Warren Buffett of another lucrative crisis-era investment.

A recent rally in Dow stock on Thursday triggered a clause allowing the chemical giant to convert the shares. That will enable the company to start keeping $255 million it has been sending to Mr. Buffett’s Berkshire Hathaway Inc. every year, and another $85 million owed to Kuwait’s sovereign-wealth fund, which owns $1 billion of the shares.

The Midland, Mich., company announced after the close it would convert the shares on Dec. 30. They will hand Berkshire roughly 6% of Dow’s common stock, while Kuwait gets about 2%. It isn’t clear what the investors will do with the new shares, but Mr. Buffett has indicated he’s a seller.

Link: Dow Chemical to Redeem Cash-Draining Preferred Stock Held by Buffet
Link: Warren Buffett's favorite investment book 'The Intelligent Investor'