Warren Buffett wants to increase his stake in Posco, Asia’s most profitable steelmaker said after its chief executive officer Chung Joon-yang met the billionaire chairman of Berkshire Hathaway Inc.
Berkshire “holds about 3.9 million shares to 4 million shares of Posco and will increase the holding,” South Korea’s largest steelmaker said yesterday in an e-mailed statement.
Omaha, Nebraska-based Berkshire didn’t immediately respond to a message left with Buffett’s assistant, Debbie Bosanek, after 9:30pm local time.
“I should have bought more Posco shares when the stock price declined in the economic crisis last year,” the statement cited Buffett, 79, as saying.
Berkshire owns 3.95 million shares in Posco, bought for US$768 million, its Feb. 28, 2009, annual statement stated.
Buffett is showing a profit of more than US$1.3 billion on his Posco holding as the world economy rebounds from the worst recession since World War II. The Pohang-based steelmaker plans to raise output by 17 percent this year and will almost double capital spending to a record to invest in plants and a mine.
Posco shares rose 1 percent to 604,000 won (US$535) at 2:24pm in Seoul, outperforming a 0.2 percent loss in the benchmark Kospi index.
“The interest of an investment guru such as Buffett is of course positive to the shares,” said Kim Young-chan, a fund manager at Shinhan BNP Paribas Asset Management Co in Seoul, which manages the equivalent of US$28 billion in assets. “If we actually get data that Buffett increased Posco holdings, that should provide a short-term boost to the shares.”
World steel demand will surge 10 percent, Posco said last week when it announced a 77 percent jump in fourth-quarter profit. The company is planning US$30 billion of overseas expansions in India, Vietnam and Indonesia, and last week said it would buy a stake in an Australian iron ore mine to secure supplies of the steelmaking ingredient.
Buffett “positively welcomes and agrees” to Posco’s investment plans to increase raw material supplies and acquire companies to beef up its global marketing efforts, the statement said.
Buffett “hopes” to visit South Korea again in autumn this year if there’s an opportunity, Posco said. Buffett made a trip to the country in 2007.
Separately, Swiss Reinsurance Co, the world’s second-largest reinsurer, sold Warren Buffett’s Berkshire Hathaway Inc a block of closed US individual life reinsurance business to cut risk and improve its capital position.
Swiss Re will use the additional 300 million Swiss francs (US$293 million) of capital generated for higher-margin life and health, property and casualty reinsurance, the Zurich-based reinsurer said on Monday.
The company received SF1.3 billion for ceding commission in return for the SF1.9 billion of life assets transferred to Berkshire, it said.
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