{"id":371678,"date":"2010-02-27T19:15:00","date_gmt":"2010-02-28T00:15:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-3428376358351339255"},"modified":"2010-02-27T19:18:23","modified_gmt":"2010-02-28T00:18:23","slug":"ny-times-buffett%e2%80%99s-bargain-shopping-spree","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/371678","title":{"rendered":"NY TIMES: Buffett\u2019s Bargain Shopping Spree"},"content":{"rendered":"

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By GRAHAM BOWLEY<\/p>\n<\/div>\n

<\/nyt_byline>Download the 2009 Warren Buffett Letter & 2009 Annual Report to Berkshire Hathaway Shareholders<\/span><\/a> <\/p>\n

America\u2019s most famous investor, Warren E. Buffett<\/a>, struck a confident note in his annual letter<\/a> to the shareholders of his holding company on Saturday, as he described in characteristically colorful terms how his businesses had largely ridden out the calamity of the financial crisis.<\/p>\n

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Nati Harnik\/Associated Press<\/div>\n

Warren Buffett told investors, \u201cWhen it’s raining gold, reach for a bucket, not a thimble.\u201d <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

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The tone of the letter contrasted sharply with Mr. Buffett\u2019s report last year<\/a>, in which he took himself to task for the company\u2019s decline in book value, only the second such decline since he took control in 1965. This time he described how he had used the last 18 months to scoop up a string of assets \u2014 a buying spree that culminated at the end of last year with the agreement to buy the Burlington Northern Santa Fe Railway, his biggest bet yet.<\/p>\n

Mr. Buffett wrote that his company, Berkshire Hathaway<\/a>, had net income of $8.1 billion last year, or about $5,200 a share, 61 percent higher than in 2008. The company also reported a 19.8 percent rise in book value. <\/p>\n

The crisis of 2007-8 led to the company\u2019s first operating loss in the first quarter of last year, raising questions about Mr. Buffett\u2019s exposure to consumer spending and the housing market. The company recovered strongly later in the year, however, helped by the rebound in the stock market, which strengthened his derivatives<\/a> holdings. <\/p>\n

In his letter, which accompanied the company\u2019s annual report, Mr. Buffett laid out in detail how many of his holdings still depended on the vagaries of housing demand and consumer spending. But shares of the company, which peaked late in 2007 around $148,220 and fell to lows of around $73,195, have since rallied to close at $119,800 on Friday.<\/p>\n

\u201cWe\u2019ve put a lot of money to work during the chaos of the last two years,\u201d he wrote. \u201cIt\u2019s been an ideal period for investors: A climate of fear is their best friend.\u201d<\/p>\n

Mr. Buffett used his letter to crack jokes and issue more of his trademark aphorisms. The so-called Sage of Omaha, he is America\u2019s most listened-to investor, and his annual letter is watched closely by investors for his assessment of his businesses and of the economy.<\/p>\n

It has, however, taken on somewhat less importance in recent years as Mr. Buffett, 79, has raised his profile with more public speaking and interviews.<\/p>\n

In characteristically blunt terms, he had harsh words for unnamed chief executives and directors who oversaw disasters at their companies during the crisis but \u201cstill live in a grand style.\u201d <\/p>\n

He said, \u201cThey should pay a heavy price,\u201d and that there must be a reform of the way executives are rewarded for their performance. \u201cC.E.O.\u2019s, and in many cases, directors, have long benefited from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.\u201d<\/p>\n

He also admitted mistakes of his own, saying he had closed a troubled credit card business, which had been his idea, and had given too much time to turn around the NetJets business, long a burden.<\/p>\n

But he dwelt also on the lucrative positions he took in a string of companies over the last year and a half, pouring $15.5 billion into shares of companies like Goldman Sachs<\/a>, General Electric<\/a> and Wm. Wrigley Jr. Wishing he had taken greater advantage of the opportunities offered, he said, \u201cWhen it\u2019s raining gold, reach for a bucket, not a thimble.\u201d<\/p>\n

Burlington Northern Santa Fe was Mr. Buffett\u2019s biggest purchase to date. Addressing that company\u2019s 65,000 shareholders, he offered them a primer in his investment rules. But he warned all shareholders that the bigger size of Berkshire Hathaway would probably mean slower growth in the future. <\/p>\n

\u201cHuge sums forge their own anchor and our future advantage, if any, will be a small fraction of our historical edge,\u201d he said.<\/p>\n

Justin Fuller, the author of a blog about Mr. Buffett and a principal at Midway Capital Research in Chicago, said this company size was an important theme of the letter: \u201cThere was a lot of talk about size and maintaining a business and how size and bureaucracy can really hurt a business over time.\u201d<\/p>\n

Mr. Fuller said Mr. Buffett had also given insights into his investing strategy \u2014 many of his businesses are now in monopoly or near-monopoly industries like railroads and utilities. <\/p>\n

Mr. Buffett told a long story about the wisdom of using a company\u2019s own shares to buy another company \u2014 which was a veiled criticism of Kraft<\/a>\u2019s takeover of Cadbury, Mr. Fuller said, but also a justification of Mr. Buffett\u2019s decision to issue shares to buy Burlington Northern Santa Fe. Mr. Buffett is a major investor in Kraft but has opposed its pending acquisition of Cadbury.<\/p>\n

Mr. Buffett\u2019s letter is watched closely for hints about when he may retire, but this year\u2019s offered none. Talking of a time when he would be long gone, he said he was still tap-dancing to work at the end of his eighth decade.<\/p>\n

He said he had sold shares in ConocoPhillips<\/a>, Moody\u2019s<\/a>, Procter & Gamble<\/a> and Johnson & Johnson<\/a>, mainly to finance his railroad purchase. The shares of these companies were still likely to trade higher, he said.<\/p>\n

Closing the letter, Mr. Buffett, ever the cheeky salesman, invited shareholders to his company\u2019s annual meeting on May 1 in Omaha \u2014 promising to play table tennis for spectators and urging them to buy goods and services from his companies, and ending, \u201cP.S. Come by rail.\u201d<\/p>\n

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