RJR Nabisco

Summary

A major American conglomerate primarily known for tobacco and food products. Berkshire invested heavily in RJR Nabisco's below-investment-grade (junk) bonds during the late 1980s and early 1990s.

Timeline & Role

• 1989-1990: Berkshire purchases $440 million worth of RJR Nabisco below-investment-grade bonds. Despite Buffett's harsh criticism of the junk bond market's excesses and the "dagger on the steering wheel" leverage philosophy, he found RJR Nabisco's credit to be better than generally perceived, yielding returns that compensated for the risk. 1990 Letter