Buffett to Fans: Opportunity Exists But Berkshire May Not Be Best Bet

Buffett to Fans: Opportunity Exists But Berkshire May Not Be Best Bet
By KAREN RICHARDSONMay 5, 2008; Page C1
Investors, take heart: Warren Buffett sees investment opportunities in the U.S. stock and bond markets, and believes widespread financial turmoil from the credit crunch is behind us.
All eyes were on Warren Buffett at Berkshire Hathaway's annual meeting at the Qwest Center in Omaha, Neb.
Speaking to reporters Sunday, a day after Berkshire Hathaway Inc.'s annual fan-fest for shareholders at the Qwest Center in Omaha, Neb., both Mr. Buffett, 77 years old, and Vice Chairman Charlie Munger, 84, criticized regulators, politicians and accountants for lax oversight of financial institutions that are at the center of the subprime-mortgage crisis, and, according to Mr. Munger, were guilty of "deep conflicts of interest."
"The regulators and the accountants have failed us terribly," Mr. Munger said, adding that mark-to-market accounting rules are necessary but can obscure other problems within a company.
This year at Mr. Buffett's annual gathering for shareholders -- often called "Woodstock for Capitalists" -- 31,000 Buffett enthusiasts were serenaded by Fruit of the Loom minstrels, enjoyed samples of Berkshire portfolio companies such as Dilly Bars and watched artist Michael Israel speed-paint a Buffett portrait with Benjamin Moore paints.
Mr. Buffett credited the Federal Reserve for helping to avert a more-widespread crisis on Wall Street by orchestrating a bailout of Bear Stearns Cos. that "prevented, in my opinion, the contagion where you're going to have runs on investment banks."
Bank losses "aren't over by a long shot, but a lot of it has already been recognized," he said, adding that the depth of the housing crisis, unemployment and other economic factors would help determine how long the write-downs continue.
"The idea of financial panic -- that has been pretty much taken care of," he said.
As to buying opportunities, Mr. Buffett told shareholders, "We are happy to invest in businesses that earn their money in the euro, or in companies that derive their earnings in Germany, or from the sterling in the [United Kingdom], because I don't have a feeling that those currencies are going to depreciate in a big way against the dollar." Sunday he said a Berkshire unit is close to buying a midsize company in the U.K., but he didn't elaborate. This month, Mr. Buffett is scheduled to tour five European cities looking for more buying opportunities.
What may not be an attractive buying opportunity? Berkshire itself, Mr. Buffett said on Saturday. "Anyone who expects us to come close to replicating the past should sell their stock. It's not gonna happen," he said. "You may have something better to do with your money than buy Berkshire."
No, his face isn't on the dollar bill. Yet.
Mr. Buffett also said Berkshire Hathaway's four-month-old municipal-bond insurance business garnered more than $400 million of premiums in the first quarter, boasting that this made its new business bigger than that of its rival. "This whole company has been built in just a couple of months," Mr. Buffett said.
Sunday he took a few jabs at rivals, saying he was confounded by the ability of his municipal-bond insurer's biggest rivals, MBIA Inc. and Ambac Financial Corp., to retain their triple-A ratings.
"If you can find another illustration of a company whose stock that's gone down by 95% in one year and is still rated triple-A, I have yet to see it," Mr. Buffett said.