Buffett Also Showing His Deft Touch With Bonds

Warren Buffett, known as one of the savviest investors in the stock market, is now showing he’s no slouch when it comes to bonds, either.

Buffett’s Berkshire Hathaway Inc. bought about $10 billion worth of zero-coupon Treasury bonds, due in about 20 years, for $2 billion over several weeks in August, according to Wall Street firms familiar with the purchases. The move, which was made while stocks were climbing, represented a big bet on bonds because zeros are among the most sensitive to changes in interest rates.

So far, that’s been a good wager, as bonds rallied while stocks sputtered.

While it isn’t known whether Buffett sold any Berkshire zero-coupon holdings since August, any that still are on the company’s books are showing handsome gains.

For instance, had Buffett bought $1 million of zero-coupon bonds, due Aug. 15, 2017, on Aug. 12--when government yields were at their high for the month--his investment would now be worth about $1,155,680.