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Nov. 18 (Bloomberg) -- Warren Buffett's Iscar Metalworking Cos., the Israeli toolmaker that agreed to buy Japan's Tungaloy Corp. in September, is seeking more acquisitions and sees the global financial slump as a buying opportunity, Chairman Eitan Wertheimer said.
``I've learned from my guru to be greedy when others are fearful,'' Wertheimer said in an interview in Jerusalem, echoing a statement frequently made by Buffett. Iscar is part of Buffett's Berkshire Hathaway Inc., which made two acquisitions in October and has comitted $8 billion to buying stakes in General Electric Co. and Goldman Sachs Group Inc.
Iscar, based in Tefen, northern Israel, makes cutting gear for industries ranging from aerospace to auto manufacturing, for clients including Toyota Motor Corp. Berkshire paid $4 billion two years ago for an 80 percent stake in Iscar, which competes with market leader Sandvik AB. Iscar is looking for industrial companies that are in the same business, according to Wertheimer.
``We like to stick to basics,'' he said. ``If you sleep on the floor, you can't fall out of bed.''
Iscar agreed Sept. 21 to buy a 71.5 percent stake in Japan's Tungaloy, a manufacturer of tools for cars and airplanes. The deal was for $1 billion, Haaretz reported.
Iscar is ``Gillette on steroids'' in the metal-cutting tools industry, said Shai Dardashti, managing partner of New York-based Dardashti Capital Management. The Berkshire shareholder cites Iscar's ``tremendous innovation'' and its commitment to research and development.
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Wednesday, November 19, 2008
Monday, November 17, 2008
Joel Greenblatt buying stocks up rabidly!
What we are seeing here is the raging market purchases of Joel Greenblatt. When normally he has a concentrated portfolio, it seems to me that this time he is taking on a more diversified approach and this is evidence that he feels that the market as a whole is undervalued. Being diversified this time as opposed to his conventional concentrated portfoliios also means that there is much more to choose from.
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Bershire "ups" shares in ConocoPhillips
Buffett's Berkshire Boosts Stake in ConocoPhillips (Update3)
By Erik Holm, Edward Klump and Linda Shen
Nov. 14 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. became the largest shareholder in oil producer ConocoPhillips and took a stake in manufacturer Eaton Corp. in the third quarter as stock markets tumbled.
Berkshire had more than 83 million shares in Houston-based ConocoPhillips as of Sept. 30, compared with about 17.5 million on March 31, the company said today in a regulatory filing. Buffett also disclosed a reduced holding in Bank of America Corp. and more shares of NRG Energy Inc., the second-biggest power producer in Texas. The Standard & Poor's 500 Index dropped 8.9 percent in the three months ended Sept. 30.
Berkshire, which purchased MidAmerican Energy Holdings in 2000 and reported record profits last year from selling holdings of PetroChina Co., is betting on a long-term increase in energy demand worldwide. Global oil consumption will increase about 25 percent to 106 million barrels a day by 2030, the International Energy Agency said this week.
``Buffett is thinking decades ahead,'' said Jeff Matthews, author of ``Pilgrimage to Warren Buffett's Omaha'' and founder of Greenwich, Connecticut-based hedge fund Ram Partners LP. ``He's thinking about oil production falling and an eventual doubling of worldwide demand as countries like China reach U.S. levels.''
ConocoPhillips traded as low as $67.31 a share in the third quarter after closing 2007 at $88.30. The company slipped $1.79, or 3.6 percent, to $47.39 in New York Stock Exchange composite trading today before Berkshire's disclosure.
Waiting for Spring
Buffett, the world's preeminent stock picker, has said he's also spending his own money to buy U.S. stocks as prices decline amid the worst financial crisis in 75 years, switching holdings from government bonds. Berkshire, where Buffett is chief executive officer, spent about $3.94 billion on stocks in the quarter and sold shares for about $300 million, according to separate filings.
``Most major companies will be setting new profit records 5, 10 and 20 years from now,'' Buffett said in a column in the New York Times in October. ``If you wait for the robins, spring will be over.''
Berkshire held about 59.7 million ConocoPhillips shares as of June 30, Buffett revealed in a separate filing. Buffett, 78, won permission from regulators to omit that number from his second-quarter filing and withhold it until today to prevent copycat investing.
Looking for Stability
``Energy is an industry that has the stability that he's looking for,'' said Michael Yoshikami, the president of YCMNet Advisors in Walnut Creek, California, which manages $850 million, including Berkshire shares. ``Conoco is a huge refiner, and while refiners are certainly under some pressure, they are essentially a service-for-fee business, so they are a classic kind of stable, core business for his portfolio.''
ConocoPhillips rose $1.06, or 2.2 percent, to $48.45 at 7:10 p.m. in New York in extended trading. Bill Tanner, a spokesman for ConocoPhillips, had no immediate comment.
Berkshire increased holdings in NRG Energy by 54 percent to 5 million shares, a 2.2 percent stake. The firm was the object of a takeover offer from Exelon Corp. after the Princeton, New Jersey-based company lost half of its market value in two months. NRG's board of directors this month rejected the offer.
Buffett also disclosed a 1.8 percent stake in Cleveland- based Eaton, the maker of parts for Boeing Co. planes and Volkswagen AG cars.
Eaton Corp.
``Eaton fits exactly with his investment strategy,'' said Gerald Martin, a finance professor at American University's Kogod School of Business in Washington. ``He likes to say that he wants to invest in companies that he can understand, that he can really get his arms around, and take a look at them and project their cash flows.''
Eaton rose $1.54, or 3.7 percent, to $42.69 at 6:24 p.m. in late trading in New York. Prices for new Berkshire holdings typically jump as mutual funds and individual investors mimic the stock picks. Martin co-wrote a study in 2007 that found buying after such disclosures would have delivered annualized returns of about 25 percent over 31 years, double the performance of the S&P 500. Eaton spokesman Peter Parsons declined to comment.
Buffett cut his stake in Bank of America by almost half, while increasing his investment in U.S. Bancorp. Charlotte, North Carolina-based Bank of America, which purchased money-losing mortgage lender Countrywide Financial Corp. in July, has lost 64 percent of its market value in the last 12 months.
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By Erik Holm, Edward Klump and Linda Shen
Nov. 14 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. became the largest shareholder in oil producer ConocoPhillips and took a stake in manufacturer Eaton Corp. in the third quarter as stock markets tumbled.
Berkshire had more than 83 million shares in Houston-based ConocoPhillips as of Sept. 30, compared with about 17.5 million on March 31, the company said today in a regulatory filing. Buffett also disclosed a reduced holding in Bank of America Corp. and more shares of NRG Energy Inc., the second-biggest power producer in Texas. The Standard & Poor's 500 Index dropped 8.9 percent in the three months ended Sept. 30.
Berkshire, which purchased MidAmerican Energy Holdings in 2000 and reported record profits last year from selling holdings of PetroChina Co., is betting on a long-term increase in energy demand worldwide. Global oil consumption will increase about 25 percent to 106 million barrels a day by 2030, the International Energy Agency said this week.
``Buffett is thinking decades ahead,'' said Jeff Matthews, author of ``Pilgrimage to Warren Buffett's Omaha'' and founder of Greenwich, Connecticut-based hedge fund Ram Partners LP. ``He's thinking about oil production falling and an eventual doubling of worldwide demand as countries like China reach U.S. levels.''
ConocoPhillips traded as low as $67.31 a share in the third quarter after closing 2007 at $88.30. The company slipped $1.79, or 3.6 percent, to $47.39 in New York Stock Exchange composite trading today before Berkshire's disclosure.
Waiting for Spring
Buffett, the world's preeminent stock picker, has said he's also spending his own money to buy U.S. stocks as prices decline amid the worst financial crisis in 75 years, switching holdings from government bonds. Berkshire, where Buffett is chief executive officer, spent about $3.94 billion on stocks in the quarter and sold shares for about $300 million, according to separate filings.
``Most major companies will be setting new profit records 5, 10 and 20 years from now,'' Buffett said in a column in the New York Times in October. ``If you wait for the robins, spring will be over.''
Berkshire held about 59.7 million ConocoPhillips shares as of June 30, Buffett revealed in a separate filing. Buffett, 78, won permission from regulators to omit that number from his second-quarter filing and withhold it until today to prevent copycat investing.
Looking for Stability
``Energy is an industry that has the stability that he's looking for,'' said Michael Yoshikami, the president of YCMNet Advisors in Walnut Creek, California, which manages $850 million, including Berkshire shares. ``Conoco is a huge refiner, and while refiners are certainly under some pressure, they are essentially a service-for-fee business, so they are a classic kind of stable, core business for his portfolio.''
ConocoPhillips rose $1.06, or 2.2 percent, to $48.45 at 7:10 p.m. in New York in extended trading. Bill Tanner, a spokesman for ConocoPhillips, had no immediate comment.
Berkshire increased holdings in NRG Energy by 54 percent to 5 million shares, a 2.2 percent stake. The firm was the object of a takeover offer from Exelon Corp. after the Princeton, New Jersey-based company lost half of its market value in two months. NRG's board of directors this month rejected the offer.
Buffett also disclosed a 1.8 percent stake in Cleveland- based Eaton, the maker of parts for Boeing Co. planes and Volkswagen AG cars.
Eaton Corp.
``Eaton fits exactly with his investment strategy,'' said Gerald Martin, a finance professor at American University's Kogod School of Business in Washington. ``He likes to say that he wants to invest in companies that he can understand, that he can really get his arms around, and take a look at them and project their cash flows.''
Eaton rose $1.54, or 3.7 percent, to $42.69 at 6:24 p.m. in late trading in New York. Prices for new Berkshire holdings typically jump as mutual funds and individual investors mimic the stock picks. Martin co-wrote a study in 2007 that found buying after such disclosures would have delivered annualized returns of about 25 percent over 31 years, double the performance of the S&P 500. Eaton spokesman Peter Parsons declined to comment.
Buffett cut his stake in Bank of America by almost half, while increasing his investment in U.S. Bancorp. Charlotte, North Carolina-based Bank of America, which purchased money-losing mortgage lender Countrywide Financial Corp. in July, has lost 64 percent of its market value in the last 12 months.
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Eddie buys more of Autonation
Billionaire investor Edward S. Lampert continued to buy shares of AutoNation Inc., putting nearly $1.4 million more into the nation's largest car dealer last week.
Lampert, a former AutoNation director who was already the company's largest shareholder, bought 228,700 shares for between $5.90 and $6.15 per share on Thursday and Friday, according to a regulatory filing.
Read more here
Lampert, a former AutoNation director who was already the company's largest shareholder, bought 228,700 shares for between $5.90 and $6.15 per share on Thursday and Friday, according to a regulatory filing.
Read more here
Wednesday, November 12, 2008
Warren Buffett can teach the world a thing or two about derivatives
He’s sold billions of dollars of them through his Berkshire Hathaway investment group. And with markets in a mess, he’s taking paper losses. But Berkshire has a huge financial cushion. That and Buffett’s management of investor expectations offer lessons for other mark-to-market sufferers.
First, he keeps that cushion plumped up. Berkshire has written derivatives on stocks and bonds with an underlying value of nearly $50bn. That’s much higher than the derivatives’ market value, which fell an estimated $1bn in the third quarter, contributing to a 77pc decline in Berkshire’s profits compared with a year earlier.
But Buffett’s company still made a profit, even with the markets in disarray. So although the final profit or loss on the derivatives won’t be known for years, he appears to have scaled his exposure so that paper losses along the way are highly unlikely to put a big hole in Berkshire’s balance sheet, undermining its other businesses.
Second, it helps that Berkshire doesn’t borrow much. The company doesn’t have to post collateral on its derivative positions – provided, among other things, it doesn’t lose its strong credit rating. With little leverage, there’s enough of a buffer that even much bigger paper losses won’t trigger that. American International Group, for one, found out the hard way that a vulnerable credit rating plus huge mark-to-market losses can quickly lead to downgrades and a life-threatening outflow of hard cash.
Third, Buffett has always told shareholders to look beyond quarterly earnings and to keep in mind the somewhat artificial accounting effects at work on both the upside and downside. He has even, once in a while, hinted that he thought Berkshire’s stock was over-valued.
By contrast, Wall Street bosses who paid themselves handsomely based on paper gains on the way up have zero credibility when they try to excuse mark-to-market losses. It’s just possible Buffett will still end up losing a lot of real money on his derivatives. But others could learn from his skills in setting the stage so that investors aren’t scared off by paper losses along the way.
First, he keeps that cushion plumped up. Berkshire has written derivatives on stocks and bonds with an underlying value of nearly $50bn. That’s much higher than the derivatives’ market value, which fell an estimated $1bn in the third quarter, contributing to a 77pc decline in Berkshire’s profits compared with a year earlier.
But Buffett’s company still made a profit, even with the markets in disarray. So although the final profit or loss on the derivatives won’t be known for years, he appears to have scaled his exposure so that paper losses along the way are highly unlikely to put a big hole in Berkshire’s balance sheet, undermining its other businesses.
Second, it helps that Berkshire doesn’t borrow much. The company doesn’t have to post collateral on its derivative positions – provided, among other things, it doesn’t lose its strong credit rating. With little leverage, there’s enough of a buffer that even much bigger paper losses won’t trigger that. American International Group, for one, found out the hard way that a vulnerable credit rating plus huge mark-to-market losses can quickly lead to downgrades and a life-threatening outflow of hard cash.
Third, Buffett has always told shareholders to look beyond quarterly earnings and to keep in mind the somewhat artificial accounting effects at work on both the upside and downside. He has even, once in a while, hinted that he thought Berkshire’s stock was over-valued.
By contrast, Wall Street bosses who paid themselves handsomely based on paper gains on the way up have zero credibility when they try to excuse mark-to-market losses. It’s just possible Buffett will still end up losing a lot of real money on his derivatives. But others could learn from his skills in setting the stage so that investors aren’t scared off by paper losses along the way.
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