Buffett plans to buy more firms, stocks
New York, October 1, 2011
Warren Buffett said he is still eager to buy companies and stocks, even as his conglomerate Berkshire Hathaway launches its first-ever share buyback programme.
Buffett, in a CNBC interview, said on Friday the repurchases will not stop the company from making acquisitions or spending on infrastructure for its portfolio of companies.
The 'Oracle of Omaha' also reiterated his support for Bank of America even as he acknowledged it will take the bank time to solve its problems.
Buffett said Berkshire bought a net $4 billion of common stock on the market in the third quarter as sharp declines presented opportunities to invest cheaply.
But it is the investment in its own shares that stunned the market. Berkshire announced the programme on Monday, saying it would pay up to 10 per cent above book value for stock.
Investors said the programme meant Berkshire was probably undervalued by 30pc or more. Buffett said the paperwork to start the buybacks was completed on Thursday.
While Berkshire has said it could spend heavily on shares, Buffett said on Friday the company would still make acquisitions and would end up spending $7 billion this year on plant and equipment for its portfolio of companies.
As he has all year long, Buffett said such investments were a bet on the economic strength of the US. 'It's very, very unlikely we'll go back into a recession,' the tycoon said.
That confidence was part of his reasoning for the deal with Bank of America, which gave him a lucrative dividend and a pile of unusually long-lasting warrants as well.
Bank of America is 'a fabulous business, but it's got a lot of problems from the past', he said, acknowledging that chief executive Brian Moynihan will need years to fix them.
Bank of America is cutting 30,000 jobs in the first phase of an expense reduction programme called 'New BAC', a play on the company's ticker symbol.-Reuters