2008-09-18 16:49:53
Warren Buffett Is Buying While Everyone Else is Selling
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Warren Buffett has long been lamenting the lack of attractive investment opportunities in the overheated US markets. Buffett was forced to travel overseas to look for places to invest Berkshire Hathaway's massive warchest of cash, which currently totals around $31 billion dollars.
According to a recent article on Bloomberg.com titled "Buffett's Berkshire Accelerates Pace of Acquisitions", Warren Buffett is picking up the pace of his acquisitions in the United States as markets fall and businesses flounder.
Buffett is never quick to commit Berkshire capital when he doesn't feel like there is fair value in the marketplace, and he never strays from his patient strategy. He sits on the sidelines, cash in hand, when everyone else is buying and driving up prices - then, when markets are dropping and nobody wants to buy, Buffett is scooping up deals left, right and center. His refusal to get caught up in panic-buying is one of the main reasons why he is the most successful investor that has ever lived.
Case in point: the Internet stock boom in the late 90s. Some investors in Berkshire Hathaway were imploring Buffett to consider commiting some of Berkshire Hathaway's capital to some of the high-flying Internet companies that were making new highs everyday. Buffett refused, saying that he didn't understand the businesses and couldn't see the value of investing in them. Buffett's steadfast refusal to change his investment strategies meant that Berkshire avoided untold millions in losses, maybe even billions.
Now that the markets are plummeting, Buffett is putting money to work. He is reported to be interested in buying some of AIG's assets. He recently completed deals to purchase the Constellation Energy Group for $4.7 billion dollars, and Marmon Holdings Inc. for $4.5 billion dollars. The Constellation purchase was Buffett's eighth since October of 2007, which is certainly an accelerated pace from the "Oracle of Omaha".
Buffett loves to snap up companies when there is "blood in the streets", and this time will be no different. I wouldn't expect his shopping-spree to slow down anytime soon.
Source: Buffett's Berkshire Accelerates Pace of Acquisitions
Filed under: The Economic Meltdown | General Market News
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