In investment circles, there’s no bigger name than Warren Buffett, the legendary Oracle of Omaha, whose prowess over the past 44 years has made Berkshire Hathaway Inc. one of the top-performing stocks in the U.S.

But with Berkshire Hathaway’s publicly traded Class B shares approaching US$3,000 apiece (or US$300,000 for a board lot), getting a chunk of Buffett is quite a stretch for many retail investors.

However, Oakville, Ont.-based Pro-Financial Asset Management Inc. , is giving retail investors exposure to Buffett’s investment smarts via its Berkshire Hathaway/ishares linked deposit notes.

The 10-year notes are issued by Paris-based Société Générale, which provides a guarantee of principal. Investors are not entitled to annual distributions, but on maturity (expected to be Oct. 31, 2016) they will receive at least their principal. As the return is linked to the performance of Berkshire’s Class B shares, the hope is they will get more.

Since those shares were created in May 1999, they have generated an annual compound rate of return of 11.6%. Over the same period, the New York Stock Exchange composite index recorded an annual gain of 8.08%.

However, in the shorter term, Berkshire’s Class B shares haven’t done as well. Over the five-year period from Sept. 28, 2001, to Sept. 29, 2006, they gained on average 6.37% a year. By contrast, the index was up by 8.04% a year over the same 60-month period.

Investors’ funds (minimum outlay is $2,500) will be invested in two ways:

> part will be invested in the Class B shares. Initially, 63% of the proceeds will be invested in the shares;

> the rest will be invested in an exchange-traded fund — Canadian Scotia Capital Universe Bond Index Fund, managed by Barclays Global Investors Services Canada Ltd. — to help provide the principal guarantee. Initially, 37% of the proceeds from the new issue will be invested in the bond fund.

Investors’ funds will be allocated at regular intervals between the two asset classes by way of a process known as “dynamic asset allocation.” Plans call for more of the proceeds to be invested in the Class B shares as those shares begin to appreciate, in the hope of further gains; if the value of shares begins to decline, more of the proceeds will be invested in the ETF.

Given that the issuer will take on leverage, an investor’s maximum exposure to the Class B shares is 150% of the amount that is raised. If the exposure is 150%, then leverage would represent 50% of the assets.

Investors aren’t allowed to redeem the notes until maturity. Their only liquidity option prior to maturity is to sell into the secondary market that will be created by Société Générale. The bank plans to quote a weekly price starting next April. But it should be pointed out that the French bank isn’t obligated “to quote a price [or] provide liquidity to facilitate a secondary market,” according to the information statement.

If investors decide to sell prior to April 2010 — three years after the secondary market comes into effect — they will be subject to an early sales fee.

Ravi Ramaswamy, senior vice president at Pro-Financial, says that the notes are meant to appeal to “those investors who have a deep value global orientation. While Berkshire Hathaway is a single stock, it is very diversified in the types of businesses it owns.” He adds that the principal guarantee should appeal to those equity investors who want some downside protection.

The advisor or broker is paid an up-front commission of 4% by Société Générale. The investor pays an annual fee of 1.9%. The note is open to purchases until on or about Nov. 30, 2006.

Starting from a basic holding of insurance companies, Berkshire Hathaway has broadened its investment approach from strict value to buying high-quality businesses that have enduring competitive advantages. Buffett, 76, argues that such companies — including American Express, Coca-Cola and Gillette —have the ability to keep rivals at a safe distance. IE