Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) is often considered the greatest investor in modern times. Some of us think that his status should be one of “The greatest investors of the 20th century” but almost everyone agrees that when Mr. Buffett speaks he still is worth listening to. Buffett has said that investors need to be greedy when others are fearful, and they need to be fearful when others are greedy. So how does that pertain to Buffett’s recent investing in Europe?
It was either in late-2011 or early on in 2012 that Warren Buffett started to purchase stakes in several key European industrial companies which he thinks will survive the woes of Europe. There is just one problem: the European markets have not stabilized. They have gotten worse. It was just in recent weeks that Mr. Buffett even went as far as to say he is not sure if the Euro will survive and that it cannot survive in its current form.
This begs a question: How much has Buffett lost by investing in European industrial companies? We do not know which companies were purchased on behalf of Berkshire Hathaway nor exactly what the size of the stakes came to in total. That being said, here are some of the potential companies if you look through Buffett’s U.S. holdings to get an idea of what he likes:
Nestle and Unilever could easily fit in with food and products. Philips and Siemens could easily fit into the conglomerates. Deutsche Telekom or another telecom operator could have been a selection for the high steady payouts. Would Buffett have dared to buy banks like Deutsche Bank, Barclays, UBS, Credit Suisse, or others? We already know that Mr. Buffett plays in insurance and reinsurance in Switzerland and Europe. And drug companies he likes too with stakes in GlaxoSmithKline and Sanofi-Aventis.
What is interesting is that some of these companies have so far managed to hold up even as the dollar is strong. Other companies have not held up well at all, particularly if they are based in the nations called the PIIGS or if they have large exposure to the PIIGS.
We cannot tally up the damage without having a better idea of Mr. Buffett’s full stakes and he is often able to get ‘confidential treatment’ in his filings which might generally offer more information. What is interesting is that it might even be possible that Buffett has not lost that much in Europe as of now. We would sure like to know what the size of these exact stakes are so that Berkshire investors can get a better handle of what it is that they own.
JON C. OGG