Berkshire prefers buying big businesses: Buffett on CNBC

Berkshire prefers buying big businesses: Buffett on CNBC

3:17pm EST

(Reuters) – Conglomerate Berkshire Hathaway (BRKa.N:QuoteProfileResearchStock Buzz) would rather keep buying big businesses than simply adding to stock holdings, company head and legendary investor Warren Buffett said on Monday.

“Our preference at Berkshire is to keep buying big operating businesses,” the billionaire investor said in an interview on CNBC. “In terms of building Berkshire for the long term, we just like adding earning power, big chunks of earning power.”

However, he added that stock holdings were “generally for very long term.”

The interview came two days after Buffett released his annual letter to shareholders, in which he signaled that his hunt for “elephants,” or large acquisitions, continues.

That business-buying strategy has helped Buffett build Berkshire over the decades so it now holds dozens of businesses, from ice cream to insurance.

With Berkshire’s range of businesses and stock holdings, some analysts compare Berkshire to an index fund tied to the health of the U.S. economy, the world’s biggest, in which Buffett has expressed strong optimism in recent years.

But as Berkshire has grown, regulators are now weighing whether Berkshire Hathaway should be considered a systemically important financial institution, or one that is too big to fail, Bloomberg reported earlier this year.

“We’ve heard absolutely nothing from the people in charge of what’s called SIFI,” Buffett said on CNBC on Monday.

As he’s done over the years, Buffett encouraged investors of all sizes and stripes to put their money to work, potentially earning greater returns than by simply holding cash.

Still, in emphasizing productive assets, he noted at least one investment in which he is not bullish: bitcoin.

“It’s not a currency,” he said flatly.

Mt. Gox, once the world’s biggest bitcoin exchange, filed for bankruptcy on Friday, underscoring the growing pains facing the world of cryptocurrencies.

“I wouldn’t be surprised if it’s not around in 10 to 20 years,” he added.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

<span>%d</span> bloggers like this: