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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1456)	3/14/1999 6:16:00 PM
From: porcupine --''''>	Respond to of 1722

Buffett Hikes Stake In American Express By Bob Burgdorfer CHICAGO (Reuters) - Billionaire investor Warren Buffett said Saturday that Berkshire Hathaway Inc. (NYSE:BRKa - news), the giant holding company he manages, increased holdings in American Express Co. (NYSE:AXP - news) in 1998, but left unchanged holdings in two other major companies. Berkshire's net earnings for the year were up more than 48 percent to $2.83 billion, but future gains will likely fall short of that because such growth cannot be maintained, said Buffett in his annual report. Investors scrutinize Buffett's investment strategies and often react based on his moves. Buffett said his Omaha, Neb.-based Berkshire Hathaway added to its holdings of American Express to nearly 50.54 million shares in 1998 from nearly 49.46 million 1997. Its largest stake, 200 million shares of the Coca-Cola Co. was unchanged from 1997, as was 96 million shares in The Gillette Co. The 1998 report showed Berkshire also owns huge stakes in Walt Disney Co. and Wells Fargo and Co. He expressed disappointment in the sale of McDonald Corp. shares. ''The portfolio actions I took in 1998 actually decreased our gain for the year. In particular, my decision to sell McDonald's was a very big mistake. Overall, you would have been better off last year if I had regularly snuck off to the movies during market hours,'' said Buffett, in his usual casual manner. In the 1996 annual report, Berkshire said it owned 30.2 million shares of McDonald's, but in the 1997 report the firm was not listed among its stock investments. Berkshire's stock value rose more than 48 percent, but Buffett said that increase was largely due to using shares to buy companies, such as insurance firm General Reinsurance and the jet leasing firm Executive Jet Aviation. Berkshire also owns International Dairy Queen, as well as companies that sell furniture, jewelry and candy. Despite this earnings growth, Buffett was disappointed in some companies in which Berkshire owns stock. ''On the minus side, several of the public companies in which we have major investments experienced significant operating shortfalls,'' Buffett wrote. ''The problems of these companies are almost certainly temporary, and Charlie (Munger, Berkshire's vice chairman and Buffett's partner) and I believe that their long-term prospects are excellent. Earlier this month, Buffett said on ABC News ''Nightline'' program the stock market has had unprecedented increases and was in a dangerous period. In 1998, Berkshire amassed a $15 billion cash stockpile that Buffett said may be used for investment purposes. ''Charlie and I will continue our search for large equity investments or, better yet, a really major business acquisition that would absorb our liquid assets. Currently, however, we see nothing on the horizon,'' said Buffett. In the report, Buffett praised the performance of Berkshire's GEICO Corp unit, the seventh largest U.S. auto insurer, although earnings were down because of increased marketing expenses and a rate reduction. Another rate reduction in 1999 should trim GEICO's profit margin to about four percent from 1998's 6.7 percent, he said.