Warren Buffett going global

Alec Hogg reports from Omaha: Buffett, the world's top investor wants much more money outside the US.

Omaha -

After the success of his first step, the $4bn acquisition of Israel's Iscar, the world's smartest investor is now keen to invest aggressively outside of his home country.

Berkshire Hathaway Chairman Warren Buffett (76) articulated this to 27 000 shareholders who made the annual pilgrimage to his US heartland hometown over the weekend. Buffett said in the next few months he will be stepping up efforts to invest abroad, admitting "we can be validly criticised for not making more of an effort (in the past)".

Corn-fed Buffett is a notoriously bad traveller who prefers crunching numbers (and working the phone) from his modest office and home in Omaha. On a rare trip to France some years back, he made news when eschewing its best restaurants in favour of burger and fries (and an annual report) in his Paris hotel room.

Virtually all of Berkshire's 217 000-employee, $100bn a year operation is housed in the US. So Buffett's desire to substantially raise the "half dozen or so" non-American investments heralds a new direction for the group.

Buffett told the seventh consecutive record crowd at Berkshire's annual general meeting (AGM [up 3 000 on last year]) that during the next few months he will be working closely with the CEO of the new Israeli subsidiary to pursue opportunities outside America.

He explained: "The hard fact is that we were not on the radar screen abroad as we have become in the US. Eitan (Wertheimer, Iscar's chairman) has a programme to change that."

Berkshire's pre-meeting corporate movie helped focus shareholder attention on the strategy, showing them what Buffett and vice chairman Charlie Munger (83) witnessed at Iscar when visiting Israel in September.

Buffett enthused that the acquisition was a bigger highlight than last year's world record one-year net worth gain of $17bn. He raised a spontaneous cheer from the AGM attendees when shown on video saying "Israel will always be here....and Berkshire will always be in Israel." Usually subdued Munger raved about Iscar's technology and space age production plant.

The offshore drive comes as Berkshire has been upping the ante with already sizeable bets against the Greenback, a currency which Buffett is convinced will continue sliding: "...(the US) is following policies that over time are likely to see the dollar fall in value against major currencies. For a while now we have been focused much more on buying into companies that generate revenue in other currencies".

In the past four years, Buffett's view of continued dollar weakness has netted Berkshire a direct profit of $2,2bn in its foreign exchange bets. He says Berkshire has now traded out of all barring one of those currencies, but isn't about to give that secret away: "You'll be surprised (at the one we still hold); but you'll have to wait until next year to find out."

Although much of the attention is offshore, Buffett says he continues to invest in the US share market, injecting a further $5bn into equities during the first three months of the year. But while he prefers shares to fixed interest alternatives on a longer-term view, he expects future gains to be modest.

South Africa received its first ever mention at the Berkshire AGM when Buffett noted that the event had this year attracted 600 shareholders from outside the US and Canada: "This is a record (up from 400 last year) with about 100 from Australia and almost as many from South Africa."

The latest unit trust portfolios confirm the growing interest. At the end of March, seven South African unit trusts owned a combined R158m worth of Berkshire Hathaway stock. Biggest individual holder was the Investec Opportunities Fund's R71m, all of which was acquired during the quarter.

The fund's manager Clyde Rossouw, in Omaha with colleague Sam Houlie, said he enjoyed the experience. Long-time "Buffett-philes" Kokkie Kooyman (Sanlam Investment Management) and Walter Aylett, formerly of Coronation, clearly delighted in their Pied Piper role of attracting the expanding number of SA asset management professionals.

Although leading SA value house Allan Gray was notable by its absence, there were sizeable contingents at this year's Berkshire AGM from Sanlam, Coronation and stockbrokers BJM (which run a special Berkshire Hathaway fund for small investors).

Moneyweb Radio market commentator David Shapiro was among those making their first visit.

Less welcome than these fresh converts to the Buffett cause were a handful of activists who used the global stage to express their opinions.

It was hardly a hijacking. Buffett allowed them to state their cases clearly but without disrupting much of the five-hour public session. But statements and subsequent questions from three different interest groups contrasted starkly with the relaxed mood and focused themes of past years.

FirstRand co-founder Laurie Dippenaar, attending his fifth consecutive AGM, reckoned: "Warren [Buffett] handled it very well, but seemed a bit rattled by the end of it. It's not his style to be portrayed as the bad guy. I think he will do something to ensure he's not subjected to this kind of thing again."

Berkshire was criticised from the floor about its investment in PetroChina (accused of propping up the regime in Sudan); for dams in Northern California owned by its electricity subsidiary PacifiCorp (which has decimated salmon fishing in the area); and for the group's continued support of Planned Parenthood and other pro-abortion bodies.