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1.3 / 23 is less than 6 percent ROI, and buffet thinks this is a good investment. Granted, they may think the business can be streamlined, but I still think this says a lot about the capital glut that's driving down returns.

Ps: Most of this deal is financed with debt, so there buying 6% ROI with debt.

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as long as the debt costs them less than 6% then free money

Berkshire Hathaway's biggest problem is finding productive investments on the scale of the cash they generate. There insurance float provides them with what is essentially interest free loans if they estimates losses well.

as long as (profit - cost of debt)/(invested capital) > (ROI on best alternative investment) then free money.

Low risk, low volatility 6% ROI isn't a bad investment at all, but I think smart money is on Buffett having an idea or two for increasing that number.

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