Warren Buffett: Japan Disaster Presents A 'Buying Opportunity'

DAEGU, South Korea (Reuters) - Billionaire investor Warren Buffett believes Japan's devastating earthquake is the kind of extraordinary event that creates a buying opportunity for shares in Japanese companies.

Japan, the world's third-largest economy, has been battling to bring an overheating nuclear plant under control after it was battered by the March 11 earthquake and tsunami that rattled global markets and prompted massive intervention in currency markets by the Group of Seven industrial nations.

"It will take some time to rebuild, but it will not change the economic future of Japan," Buffett said on Monday on a visit to a South Korean factory run by a company owned by one of his funds. "If I owned Japanese stocks, I would certainly not be selling them.

"Frequently, something out of the blue like this, an extraordinary event, really creates a buying opportunity. I have seen that happen in the United States, I have seen that happen around the world. I don't think Japan will be an exception," said the 80-year-old investor, dubbed the "Sage of Omaha" for his successful long-term investment strategy.

Buffett heads Berkshire Hathaway Inc, which has substantial insurance and utility investments globally.

Japan's Nikkei share average rose 2.7 percent on Friday, buoyed by the G7 support, but still ended the week down around 10 percent, with some $350 billion wiped off share values -- the market's biggest weekly slide since the global financial crisis in 2008. Japanese markets were closed on Monday.

Buffett said Berkshire Hathaway, which at the year-end was sitting on $38 billion of cash equivalent and last week bought U.S. specialty chemicals maker Lubrizol for $9 billion, was looking for more large-scale acquisitions anywhere in the world.

In his annual letter to Berkshire Hathaway shareholders last month, Buffett had said he was looking for more acquisitions.

"The United States is most likely where we will do something," he said at a ground-breaking ceremony for a South Korean factory run by a unit of an Israeli firm owned by his investment vehicle.

Buffett will have yet more money to invest after Goldman Sachs buys back $5 billion of its preferred stock from Berkshire Hathaway, which the fund bought at the height of the global financial crisis.

EYE ON KOREA

Buffett, ranked the world's third-richest man by Forbes this year, said he was also looking to buy entire businesses and large-cap shares in South Korea -- where Berkshire is already a leading shareholder in steelmaker POSCO.

He said geopolitical risks associated with North Korea had not curbed his interest in South Korea, Asia's fourth-largest economy. Berkshire also owns a stake in Chinese car and battery maker BYD.

Buffett did not disclose any holdings in Japan on Monday, and Berkshire Hathaway's annual report did not show any major investments there. He had been due to visit Japan later this week, but canceled due to the earthquake.

Unlike many foreign fund managers, Buffett, who arrived in the southeastern city of Daegu on Sunday by private jet, won plaudits from ordinary South Koreans.

Sporting gray sweat pants and running shoes, Buffett was greeted by signs reading "Mr Buffett: Daegu Loves You."

Many in this country of nearly 50 million people have bad memories of the 1998 Asian financial crisis when a deal with the International Monetary Fund bailed out the country but at the cost of tens of thousands of jobs.

Some U.S. hedge funds have been branded "vultures" for buying South Korean assets on the cheap in the wake of that crisis.

"It's a once in a life-time opportunity. I'm honored to meet such a respected businessman," said Seo Hyun-joo, a housewife wearing Korean traditional dress.

Buffett later meets South Korean President Lee Myung-bak in Seoul and heads to India on Tuesday to launch his firm's insurance selling portal.

(Reporting by Hyunjoo Jin; Editing by David Chance and Ian Geoghegan)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[RRK70]

10:15 AM on 03/25/2011

Anyone think this event will lead Japanese companies to invest R&D into renewable energy technology?

[aicon]

05:18 PM on 03/22/2011

Human compassion ended in his rectum. This is a piece of garbage news unworthy of publishing and a distasteful example of what America is becoming all about. Cash at any cost.

[DaMojo]

04:53 PM on 03/22/2011

It's a shame no one but the uber rich can afford to invest. So, it's just the rich getting richer.
Samey same.

[BlackRabbit]

10:21 AM on 03/23/2011

Anyone can afford to invest. Low-price online trading means that you can buy $1000 of shares in an instant and the brokerage fees won't kill you.

And anyone with even an average income can find money to invest if they show even a little fiscal restraint.

[Commie]

04:36 PM on 03/22/2011

Tepco closed up %15.87 today after going up %18 yesterday

[BlackRabbit]

02:23 PM on 03/22/2011

Today the Nikkei 225 had a big jump in value, reportedly due to foreign buyers.

Japan owes Buffett a cherry coke.

[BolaMuyis]

01:12 PM on 03/22/2011

Regardless of how it's interpreted this man has only stated the obvious. For where you have loss there is also gain. It's just the way the world works. The truth remains the truth weather it's for or against us.

[Oni]

11:44 PM on 03/28/2011

Fanned

[strangelet]

04:44 AM on 03/22/2011

Good grief. Warren Buffet is just about the most benevolent super-rich guy in the world, and people are ragging on him because he stated the obvious -- that Japanese companies will be wrongly undervalued for a while in the wake of the earthquake/tsunami. (That's called a buying opportunity).

He's talking about the Japanese stock market (and its American derivatives), which is still open and functioning. Stock trading has nothing to do with the physical disaster, and doesn't even have any symbolic significance -- since all the global markets have remained open throughout.

If anything, his remark might precipitate an increase in investment in stock of Japanese companies (whose stock prices dropped sharply), and therefore strengthen the Japanese economy at a time when it could use some support.

A few facts about Buffett: He intends to bequeath the vast majority of his personal fortune to charity (unlike, say, Sam Walton). He has persuaded other billionaires -- notably Bill Gates -- to devote large portions of their wealth to charity. He was "fired" from his position as an economic advisor to the Governator (Ahnold) because he publicly said that California's Prop 13 is a stupid idea. Contrary to the view expressed by a couple of commenters, he does NOT acquire companies and then break them up and sell the bits. There are people who do this, but I defy you to find an example of Buffet doing it.

Oh, and it's "Oracle of Omaha", because of the alliteration, y'know.

[Jacob Black]

10:09 AM on 03/22/2011

Thank you.

[Je61055]

12:39 AM on 03/22/2011

Do any of you penniless posters really think you will be of more help to Japan than Buffett? He can help stabilize their economy, what will you do?

[gomezrules]

12:29 AM on 03/22/2011

There's much that I admire about Buffett, but this smacks of not even waiting until the bodies are buried before one tries to grab a good deal! Let them mourn first, Warren, before talking 'turkey'!

[edayres]

11:53 PM on 03/21/2011

Jesus, what poor taste. Jokes are off limits but when it comes to "buying opportunities" anything goes? I would imagine

[Rachel O]

11:25 PM on 03/21/2011

Wow, posters are dvmb. Warren Buffet is discouraging the collapse of the Japanese economy and you folks are shrieking about him not thinking hard enough about of the children or some nonsense. This guy wields incredible influence in the world of investing--influence that is desperately needed in a climate where everyone is bailing out of Japanese companies, a situation that could lead their recession into a depression. Financial stability is critical to their recovery so grow up and read past the headline.

[Frog in a pot]

11:38 PM on 03/21/2011

Yes all true.But there is something about the people with means who swoop in after a tragedy and profit from it.Is it a good thing for a community for forclosed homes to be bought?,,,,sure.Is there something distasteful about the kind of person who makes a living doing that?...absolutely.

Mag-gots are necessary in nature too...but I would hope you dont want to share you bed with them.

[BlackRabbit]

02:28 PM on 03/22/2011

These vulture funds help to stabilize a plummeting market. They are willing to pay you something for your assets when others won't give you the time of day.

And they are able to find value where others only see ashes. I find something admirable in that.

[madisonlike60]

11:39 PM on 03/21/2011

Thank you for your thoughtful comments. If people read the complete story, I'm sure some these posts would not be here. He didn't say he was buying Japan, he just made an observation. He said most he would probably be investing in America this fiscal year, NOT Japan.
He's not called the "sage of Omaha" for nothing.
F&F

[doneflyin]

11:23 PM on 03/21/2011

Warren has always said smart investors buy when there is bl00d in the streets.

And there's plenty of that in the streets of Japan.

[msjimmied]

11:21 PM on 03/21/2011

He would sell tickets to his own funeral. Read that somewhere else, but it's a good line! That's Warren for ya.

[socialtalker]

11:16 PM on 03/21/2011

people are bashing him, but i get the impression he said that to give confidence and stabilize japan's economy, not to make a quick buck.

[malander]

11:14 PM on 03/21/2011

Sigh... Grave robbing already.