Warren Buffett: Looking ahead

Omaha, Nebraska, May 8 (Reuters): Billionaire US investor Warren Buffett said he wants to use some of his firm’s $40 billion (?21.5 billion) cash to invest in overseas companies, and pinpointed Europe and Japan.

The world’s second-richest person wants to put his insurance and investment conglomerate Berkshire Hathaway Inc’s cash pile to better use and ideally shrink it to $10 billion.

Buffett, Berkshire’s chairman and chief executive, said he has concerns about the dollar, which he sees weakening further, and he also said he doesn’t find “screaming bargains” in the United States in big companies at present.

Berkshire made its first acquisition of a non-US based company on Friday, with a deal to buy 80 per cent of Israel’s Iscar Metalworking Cos in a transaction valuing the closely held tool firm at $5 billion.

Buffett said while Berkshire had always been willing to do things outside the US, it wasn’t offered many opportunities in the past, though more might now come after the Iscar buy.

He told Berkshire’s annual meeting on Saturday he was eyeing a possible $15-billion acquisition, but said there was only a small chance of that happening, and gave no further details.

Some 24,000 shareholders packed Omaha’s Qwest Centre to hear Buffet speak. Many have made healthy gains from Berkshire stock, which has far outperformed benchmark indices since Buffett took over the company in 1965.

Buffet said he sees opportunity for investments in Europe and Britain, which looked a “fertile field”, and sees potential for buying whole companies in Japan, partly because of a rise in shareholder activism that could encourage firms to find a home at Berkshire.

Succession issue

One question that causes much speculation is who will eventually succeed Buffett, 75. Although he hasn’t named a chief executive, he said he hoped his son, Howard Buffett, would become non-executive chairman, and be a “double protector” of Berkshire’s culture.

He also said Joe Brandon, who runs Berkshire’s General Re insurance unit, was doing “fine” and has “done a great job”. Last year, Berkshire said securities regulators may sue Brandon and former and current subordinates of General Re, over their roles in a 2000 transaction that helped American International Group Inc inflate its reserves.

The SEC filed a civil charge earlier this year but did not cite Brandon, according to a newspaper report.