Warren Buffett: US Dollar is
in trouble
The Independent
Buffett sorry for his $1.6bn winning bet against dollar
By Katherine Griffiths in New York
07 March 2005
Warren Buffett, the US investment guru, warned that the dollar
was set for a fresh slump as he revealed that Berkshire Hathaway,
the company he chairs, made $1.6bn (£830m) after predicting
its drop in the final four months of last year.
In his highly popular annual letter to shareholders, America's
second-richest man expressed regret that his bet against the
dollar had been so profitable, and urged the US administration to
take action to deal with its widening trade gap and budget
deficit.
Mr Buffett, 74, one of America's most successful businessmen
for the past half century, said: "In no way does our thinking
about currencies rest on doubts about America."
But the so-called Sage of Omaha, whose company is based in the
Nebraskan city, added that policymakers' hopes for a soft landing
were wide of the mark. "The evidence grows that our trade
policies will put unremitting pressure on the dollar for many
years to come," he said.
In his famously folksy style, Mr Buffett turned to one of
America's most famous comedians to sum up the situation, saying:
"As WC Fields once said when asked for a handout, 'Sorry, son,
all my money's tied up in currency'."
Fourth-quarter net income at Berkshire Hathaway rose 40 per
cent to $3.34bn, boosted by its position on the dollar. Annual
profit fell 10 per cent to $7.3bn. Mr Buffett said he "struck
out" by not managing to spend any of the $43.3bn of cash
Berkshire has on its books.
"My hope was to make several multibillion-dollar acquisitions
that would add new and significant streams of earnings," he said,
adding that the company would renew its efforts this year to find
businesses to buy, including an acquisition of at least $5bn.
Mr Buffett, an outspoken critic of poor management in US
boardrooms, found himself on the receiving end of shareholder
lobby groups last year. Some institutions questioned whether he
was able to act as an independent director on the Coca-Cola
board. Berkshire Hathaway is Coke's largest shareholder and at
the same time its subsidiaries do business with the soft drink
maker.
"I'm puzzled how anyone could conclude that our Coke purchases
would control my decision-making when the counterweight is the
well-being of $8bn of Coke stock held by Berkshire," Mr Buffett
said. "Assuming I'm even marginally rational, elementary
arithmetic should make it clear that my heart and mind belong to
the owners of Coke, not its management."
He added that some institutional investors missed the point in
their attitude to corporate governance. "Usually, they've focused
on minutiae and ignored the three questions that truly count.
First, does the company have the right CEO? Second, is he/she
overreaching in terms of compensation? Third, are proposed
acquisitions more likely to create or destroy per-share value?"
he said.
Some 19,000 shareholders attended Berkshire Hathaway's annual
meeting last year to see Mr Buffett in person, for a performance
which usually includes views on the state of the world's economy
and jovial banter with his friend and vice-chairman, 81-year-old
Charles Munger. This year's annual meeting is on 30 April.
Over the past four decades Mr Buffett has transformed
Berkshire Hathaway from a failing textile manufacturer into a
$137bn company by acquiring shares in sound businesses whose
stock is out of favour with investors. In his letter, sent on
Saturday, he said new "whistleblower lines" that some companies
set up to try to improve internal governance were a good
thing.
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