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Buffett finds slim pickings in market for acquisitions

UNHAPPY POSITION The Omaha investment guru said his firm ended last year with US$43 billion in cash equivalents, and that he found few good deals


Billionaire investor Warren Buffett says he had hoped to make several multibillion-dollar acquisitions last year, but found few options.

"I found very few attractive securities to buy," Buffett wrote in the annual report for his company Berkshire Hathaway. Berkshire ended last year with US$43 billion of cash equivalents, something that Buffett, the company's chief executive, called "not a happy position."

The bulk of the letter was positive, and the 74-year-old investment icon said he and Vice Chairman Charlie Munger, 81, would not be deterred.

"Charlie and I will work to translate some of this hoard into more interesting assets during 2005, though we can't promise success," he wrote.

Quiet oracle

Buffett, known widely as the "Oracle of Omaha" for his insight into all things financial, was mum on the subject of an investigation of alleged bid-rigging and price-fixing in the insurance industry by New York Attorney General Eliot Spitzer. Buffett received a subpoena in January and has said he would cooperate. His insurance holdings include auto insurer Geico.

It's no surprise he wasn't able to find any companies to acquire last year, because it's a seller's market and there's a lot of activity in mergers and acquisitions, said Steve Kaplan, a professor at the University of Chicago Graduate School of Business.

"He won't find anything this year either," Kaplan said. "Since he likes to buy things cheap, it's harder to find."

Shares of Berkshire Hathaway class-A stock fell US$302, or less than 1 percent, to close at US$89,300 Friday on the New York Stock Exchange.

Berkshire's profit fell 10 percent from nearly US$8.2 billion in 2003 to US$7.3 billion last year. However, its fourth-quarter results were strong, with net earnings climbing to US$3.34 billion, up some 40 percent from the same period in 2003.

In his letter to shareholders, Buffett highlighted the company's gains in book value -- which determines value by looking at a company's assets minus its liabilities -- as opposed to its true market value of about US$135 billion, or nearly US$90,000 per share.

He said Berkshire Hathaway posted a gain in book value net worth of US$8.3 billion last year, a per-share increase of 10.5 percent and just short of the S&P 500's gain of 10.9 percent last year. In 2003, the company saw a 21 percent increase in book value while the S&P 500 grew by 28.7 percent.

A call to Berkshire Hathaway offices seeking comment Saturday was not immediately returned.

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