Posted on 12/27/2007 8:23:25 PM PST by bruinbirdman
When Warren Buffett so much as scratches his nose, the investment world sits up and takes notice. So the Buffettologists will be all over the latest acquisition by the world’s smartest investor.
While his rivals were still digesting their sprouts, Mr Buffett announced on the evening of Christmas Day that Berkshire Hathaway was paying $4.5 billion (£2.25 billion) for majority control of Marmon Holdings, an industrial conglomerate owned by the Pritzker family of Chicago.
Outside his insurance company investments, this is Mr Buffett’s biggest deal yet. Given Berkshire’s investment preferences, there were few surprises in the deal. Marmon’s products are easy to understand and low-tech. It makes stuff such as railway tankers, plumbing materials and household wiring. The company is nicely unfashionable - a sprawling conglomerate of 125 subsidiaries. And it looks cheap. Details are scant but Mr Buffett appears to be paying less than ten times after-tax profits and less than one times sales.
All very Buffett. However, the timing of the deal and the geographic market of Marmon - overwhelmingly the US – make it more interesting. Berkshire is no stranger to overseas investments yet chose to snap up an asset in its own backyard just as America is threatened with a severe downturn, possibly a recession.
Of course, Berkshire is a famously long-term investor and isn’t particularly bothered about getting its timing exactly right. Nevertheless, this is a vote of long-term confidence in the US economy generally and in the poleaxed housebuilding sector in particular.
The other intriguing aspect is what Mr Buffett has chosen not to invest in. It’s a certainty that the investment banks seeking out rescue capital over the past few weeks would have had Omaha, Mr Buffett’s home town, high on their list of places to visit. Mr Buffett has the cash ($50 billion and rising), the reputation and the appetite to do just these kinds of big, difficult deals – ballsy investments conventional funds would shun. “I can spend money faster than Imelda Marcos when things are right,” he once said.
Rumours he was poised to invest in the troubled investment bank Bear Stearns, then in the mortgage lender Countrywide Financial, turned out to be false. Since then Citigroup, Morgan Stanley, UBS and Merrill Lynch have all gone out in search of rescue capital and have all struck deals with Middle Eastern or Asian sovereign wealth funds.
In every case, Mr Buffett has been nowhere to be seen.
The idea that Mr Buffett wants nothing to do with banks doesn’t square with the facts. He was certainly bruised by his investment in Salomon Brothers in the 1990s. He joked at the time: “I felt like the drama critic who wrote ‘I would have enjoyed the play except that I had an unfortunate seat. It faced the stage’.” But in the end he exited Salomon with a respectable profit when it was offloaded to Travelers, later merged with Citigroup. Bank investments like American Express and Wells Fargo have also paid off handsomely.
In the latest deals, the banks were dangling seemingly enticing terms. Citigroup offered a juicy 13 per cent coupon on the convertible shares sold to Abu Dhabi while Merrill gave the Singaporeans a 12 per cent discount and a money-back guarantee. Yet Mr Buffett appears not to have been swayed.
Goldman Sachs reckons Wall Street’s finest are due to confess to yet another wave of sub-prime writedowns. Mr Buffett’s apparent indifference thus far to any of the approaches and blandishments from said banks suggests he might agree.
Anybody who thinks Planned Parenthood is doing a “lot of good things” is nearly evil incarnate. An old, self-obsessed coot who believes in inheritance taxes and hates the unborn. Can you think of a more Dickensian villain?
No wonder he’s such a strong supporter of it and the liberal politicians who keep it in place.
Globalist Buffet is buying American infrastructure and leaving the government-insured lenders to others.
Only “nearly”?
Member companies of The Marmon Group operate independently within nine diverse business sectors, grouped within four business segments:
Electrical Components: Wire & Cable Products serving energy related markets, residential and non-residential construction and other industries.
Transportation Equipment Services: Transportation Services & Engineered Products, including railroad tank cars and intermodal tank containers; and Highway Technologies, primarily serving the heavy-duty highway transportation industry.
Construction & Industrial Components: Distribution Services for specialty pipe and tubing; Flow Products for the plumbing, HVAC/R, construction and industrial markets; Industrial Products including metal fasteners, safety products and metal fabrication; and Construction Services, providing the leasing and operation of mobile cranes primarily to the energy, mining and petrochemical markets.
Retail Solutions: Water Treatment equipment for residential, commercial and industrial applications; and Retail Services, providing store fixtures, food preparation equipment and related services.
Member businesses employ 21,500 people and operate more than 250 production facilities, primarily in North America, the United Kingdom, Europe and China. Collective revenues totaled $7 billion in 2006. Forbes magazine ranked The Marmon Group 35th on its 2006 list of the largest private companies in the United States.
The spelling of Marmon is very close to ‘Mammon’ ... Coincidence?
; ^ )
Seems right to me...
Anybody who thinks Planned Parenthood is doing a “lot of good things” is nearly evil incarnate. An old, self-obsessed coot who believes in inheritance taxes and hates the unborn. Can you think of a more Dickensian villain?
I actually read his autobiography and was struck by his total disconnection at a personal level. He basically pored over investment data before noting his wife had left him. This only occurred to him after he ran out of his favorite drink and noticed that his wife had hired a personal maid to come in to take care of him as a parting gesture. Top that off with that he doesn’t believe in helping his family, but willing hands over billions of dollars of Berkshire stock to the nonprofit Gates foundation (which nicely shelters his wealth from taxes), and it is obvious that the guy owns the world but really is completely broke when it comes to people who care about him. How he has become some sort of warped folk hero is quite amazing considering the outcome of his life (disregarding his obvious financial success). His obsession with killing babies further paints him out as a very cold human being.
ping
>>>>Rumours he was poised to invest in the troubled investment bank Bear Stearns, then in the mortgage lender Countrywide Financial, turned out to be false. Since then Citigroup, Morgan Stanley, UBS and Merrill Lynch have all gone out in search of rescue capital and have all struck deals with Middle Eastern or Asian sovereign wealth funds.
Funny how I don’t see Goldman Sachs on that list
related
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If he were Ebeneezer Scrooge, Tiny Tim would have been snuffed out via a free abortion.
Totally agree, somehow Buffet took his mid-western roots and completely morphed into an uber-social liberal. He couldn’t wax poetically enough about the great Katherine Graham of the Washington Post when he bailed them out back in the 80’s. He seemed to buy into the zero population elitist argument of removing the peons from Earth so the upper class could better enjoy their ski vacations. While I greatly admire his financial acumen, I give him poor grades as far as what he could have done when it came to real human beings in his life. Why does a guy like him not see the abortion industry as the evil that it is? Quite perplexing, I wish he had went the other way as he just fuels the elitists to continue their social eugenics experiment.
Among living titans of industry, only George Soros springs to mind as a possible rival.
Maybe they can share the same oven in Hell for all eternity.
[Barring the miracle of Salvation.]
Buffett, Schmuffett, I’m tired of hearing about this senile old leftist fart. He’s just another nanny fascist Dhim.
Move on to the real market.
Buffett, Schmuffett, I’m tired of hearing about this senile old leftist fart. He’s just another nanny fascist Dhim.
Move on to the real market.
That was WELL worth repeating!!!
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