The ``long-duration equity index put contracts'' are among the largest transactions Berkshire has disclosed, and they represent the kind of risk that Buffett, the company's chief executive officer, and Vice Chairman Charles Munger are turning to more often as undervalued companies get harder to find. Buffett calls such investments, including stakes in oil derivatives, silver and zero-coupon bonds, ``unconventional.''
``They figured out a very interesting strategy that basically nobody else can do because of their size and long- duration capital,'' said David Winters, who manages $400 million at Wintergreen Advisers LLC in Mountain Lakes, New Jersey, and has held Berkshire stock for his own account for more than a decade. ``Buffett and Munger have made the ultimate contrarian play here. They take a premium in today and they're willing to buy securities if markets really plunge.''
Buffett, 75, has become the world's second-richest person largely by buying stocks he considered undervalued, such as Coca- Cola Co., Gillette Co., Wells Fargo & Co. and American Express Co., and holding them for years.