Monday, March 8, 2010
Berkshire Hathaway Inc., headed by investor Warren Buffett, profited handsomely from the turnaround of POSCO shares during the crisis as it used the classic “buy-low, sell-high” strategy, the company’s annual reports said yesterday.
Berkshire upped its stake in Asia’s third-biggest steelmaker to 5.2 percent in 2008, an increase of 461,548 shares to 3.95 million shares from 2007. Taking POSCO’s dramatic rebound into account, the gain from the increase is estimated as 1.54 trillion won ($1.35 billion), or 172.4 percent.
Demand for steel products dropped with the onset of the financial crisis in 2008, pulling down shares POSCO.
POSCO shares collapsed from about 600,000 won to 240,000 won in during the June-October period, and returned to the mid-2008 level by the end of 2009. Applying won-dollar rate of 1,103 won, the average rate of 2008, Berkshire is estimated to have paid as low 468,550 won for the extra shares.
“Buffet is not influenced by short-term fluctuations of growth-driven companies. He buys value stocks and remains loyal until their potentials are realized,” said Kim Seong-bong, an analyst at Samsung Economic Research Institute.
“He seems to have increased his stake in POSCO to follow his investment principle — buy when the price is lower than value.”
When POSCO CEO Chung Joon-yang paid a visit to the Berkshire’s headquarters in January, Buffet said he would have made a greater investment in POSCO if he had found the company sooner. ([email protected])
By Cynthia J. Kim
Share Investor Blog – Stockmarket & Business commentary
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