No Companies to Buy in 2004, Buffett Says
nytimes.com
By THE ASSOCIATED PRESS
Published: March 5, 2005
Filed at 6:46 p.m. ET
OMAHA, Neb. (AP) -- The mighty billionaire Warren Buffett says he has ``struck out.'' The CEO of Berkshire Hathaway Inc. wrote in his annual report Saturday that he had hoped to make several multibillion-dollar acquisitions in 2004. He certainly had the money, so the problem? None to buy, he said.
``I found very few attractive securities to buy,'' Buffett wrote in his company's 40th annual report. Berkshire ended the year with $43 billion of cash equivalents, something he called ``not a happy position.''
The bulk of the letter was positive, and the 74-year-old investment icon said he and Vice Chairman Charlie Munger would not be deterred.
``Charlie and I will work to translate some of this hoard into more interesting assets during 2005, though we can't promise success,'' he wrote.
Buffett, known widely as the `` Oracle of Omaha'' for his insight into all things financial, was mum on the subject of an investigation of alleged bid-rigging and price-fixing in the insurance industry by New York Attorney General Eliot Spitzer. Buffett received a subpoena in January and has said he would cooperate.
It's no surprise he wasn't able to find any companies to acquire last year, because it's a seller's market and there's a lot of activity in mergers and acquisitions, said Steve Kaplan, a professor at the University of Chicago Graduate School of Business.
``He won't find anything this year either,'' Kaplan said. ``Since he likes to buy things cheap, it's harder to find.''
Shares of Berkshire Hathaway class-A stock fell $302, or less than 1 percent, to close at $89,300 Friday on the New York Stock Exchange.
Berkshire's profit fell 10 percent from nearly $8.2 billion in 2003 to $7.3 billion last year. However, its fourth-quarter results were strong, with net earnings climbing to $3.34 billion, up some 40 percent from the same period in 2003.
In his letter to shareholders, Buffet highlighted the company's gains in book value -- which determines value by looking at a company's assets minus its liabilities -- as opposed to its true market value of about $135 billion, or nearly $90,000 per share.
He said Berkshire Hathaway posted a gain in book value net worth of $8.3 billion in 2004, a per-share increase of 10.5 percent and just short of the S&P 500's gain of 10.9 percent last year. In 2003, the company saw a 21 percent increase in book value while the S&P 500 grew by 28.7 percent.
A call to Berkshire Hathaway offices seeking comment Saturday was not immediately returned.
Berkshire owned about $21.4 billion in foreign currency spread among a dozen countries at the end of the year. Buffet said this hedge against the U.S. dollar does not mean he is unpatriotic, but he voiced a warning about the nation's growing trade and fiscal deficits.
The holding company owns businesses and stock in a wide variety of industries, including insurance, furniture, restaurants, candy and newspapers.
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