>>OMAHA, Neb. -- It's feeding time for billionaire investor Warren Buffett.
The Oracle of Omaha is gobbling up assets on the cheap while many in the investment world are retreating or frozen with fear.
"When people are scared, he wants to be buying, and when they are greedy he will sell back to you," said stockbroker Andy Kilpatrick, of Birmingham, Ala., who wrote "Of Permanent Value, the Story of Warren Buffett."
Buffett has taken a particular interest of late in the severely beaten-down telecom and energy sectors.
On Thursday, Buffett's Berkshire Hathaway Inc. and Lehman Brothers Holdings Inc. gave a $900million loan to troubled energy company Williams Cos. The collateral: Substantially all of Williams' oil and gas interests at Barrett Resources, which Williams acquired last year in a deal valued at about $2.6billion.
Earlier in the week Buffett's MidAmerican Energy Holdings Co. agreed to buy struggling Dynegy Inc.'s 16,600-mile Northern Natural Gas Pipeline for $928million in cash. Analysts said Dynegy prized the pipeline as a moneymaker for the future, but the company's financial problems forced the sale.
That was Buffett's second pipeline acquisition this year. MidAmerican bought Williams' Kern River Gas Transmission Co. for $450million in March.
In the telecom sector, where overcapacity from the '90s boom has laid waste to dozens of companies and forced several to seek bankruptcy protection, Buffett invested $100million last month in Level 3 Communications Inc., a struggling fiber-optics cable company of Broomfield, Colo. The transaction, made in conjunction with a $400million investment by two others, boosted Level 3 stock more than 50 percent on the day of the announcement.
There also were rumors that Buffett was interested in the bonds of struggling telecommunications company Qwest Communications International, Kilpatrick said.
"This is classic bargain basement," Kilpatrick said of Buffett's recent moves. "He's buying them from a distressed seller and he's sitting on a lot of money."
Buying at low prices into well-known, solid companies such as Coca Cola and American Express, Buffett built Omaha-based Berkshire into a conglomerate with a market value of more than $80billion that owns insurance, restaurant, furniture and shoe companies.
Buffett, who declined to be interviewed, generally avoids high-tech companies, arguing that he cannot tell which will be usurped by technological advances.
That strategy drew criticism from shareholders in thepast few years as they watched high-tech stocks soar. But with the collapse of the Internet sector, many thanked him at this year's annual meeting for holding to his convictions.
Still, he's not always right on the money.
Buffett's Berkshire lost book value last year for the first time in its history, largely because of insurance losses stemming from the Sept. 11 attacks. Its $3.77billion loss in net worth in 2001 was a 6.2percent drop in per-share book value from 2000.
Nevertheless, Berkshire made $795million, or $521 per share, and outperformed the S&P 500, which showed an 11.9percent loss in per-share book value.
Berkshire shares continue to hold up better than the broader market. For 2002, Berkshire shares are down 7 percent, versus the 25 percent decline in the S&P.
That track record has created a following.
Buffett, who is worth an estimated $35billion and is the world's second richest person -- behind Microsoft's Bill Gates, routinely requests to seal portions of quarterly filing reports with regulators. But regulators have increasingly been reluctant to grant the request.
"No one has the clout, reputation and attention that he gets," said Stephen R. Wilcox, president of New York brokerage Kelton International.
It's just that not everyone can afford to buy Berkshire's Class A stock, which was trading in the $70,500-per-share range yesterday.
Analysts warned of the risk of trying to shadow Buffett's latest moves.
The pipeline deals give Buffett solid assets, Kilpatrick said, something stocks cannot.
Also, the amounts of money that Buffett has put into the companies are small relative to what the multibillionaire could do, Wilcox said, and they do not put him at risk of substantial losses.
Telecommunications companies face a tough road, and analysts warn that investors should be wary because of a glut of fiber-optics cable used to transfer data and voice communications and accounting scandals at WorldCom, Global Crossing and Qwest.
"You need a titanium stomach and the wisdom of Solomon to make money in this telecom meltdown," said CEO Scott Clelandof The Precursor Group, a telecommunications analysis firm in Washington.<<
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