| DALIAN, China
DALIAN, China Oct 24 Berkshire Hathaway Inc's
Warren Buffett said on Wednesday he is scouring the world for big
businesses, but is doubtful about finding a good buy in China
because the market is too hot.
Hong Kong-listed shares in mainland companies .HSCE have
risen 89 percent so far this year, while the main Shanghai index
.SSEC has surged more than two-fold in 2007 and has jumped
five-fold since the start of last year.
Buffett, speaking to reporters at the opening of a factory
owned by an Israeli company he controls, had been asked about
Berkshire's investment in PetroChina Co Ltd (0857.HK) (PTR.N),
the country's largest oil and gas producer.
Buffett said last week that Berkshire (BRKa.N) (BRKb.N) had
sold its entire stake in PetroChina, netting a huge profit for
the insurance and investment company.
"It was a very easy decision to buy PetroChina. It was
one-third of what it was worth, maybe a quarter. I doubt in the
present market I would find something like that. The market has
been too hot. I will keep looking," he said.
Berkshire at one point had a stake of 11 percent in
PetroChina. The shares were worth $3.31 billion at the end of
2006, well above the $488 million that Berkshire paid for them,
according to Berkshire's latest annual report.
Buffett said he had written to PetroChina Chairman Jiang
Jiemin on Tuesday, thanking him for the "terrific" job he and his
managers had done for shareholders.
Buffett said last week he had sold on valuation grounds, not
because of criticism that PetroChina, through its
government-owned parent China National Petroleum Corp, is too
closely linked to Sudan.
The Sudanese government has been blamed for what the White
House has called genocide in the Darfur region.
NOT ON OUR RADAR
Buffett has long lamented his inability to deploy Berkshire's
cash hoard, which totalled $47 billion at the end of June. The
Omaha, Nebraska-based company owns more than 70 businesses and
has some $100 billion of stock and bond investments.
Buffett specifically denied that Berkshire was interested in
buying shares in China Life Insurance Co (2628.HK)(601628.SS).
"There was a rumour, and that is not true. We don't have
anything against it. It just wasn't on our radar screen," he
Because of Berkshire's huge market capitalisation, any
acquisition would have to be big to make an impact on the
company, he said.
Buffett sidestepped a question about what advice he would
give to Chinese stock market investors but was happy to restate
his personal investment philosophy. He said he was hunting for
well-managed companies in sectors that he understood with an eye
to investing for 5, 10 or 20 years.
"We cannot dance in and out of businesses," he said.
He said he did not mind taking a big bet on a familiar
business. "Diversification is a protection against ignorance," he
said. "If you understand the business and buy at attractive
prices, there really isn't much risk."
Turning to the meltdown in the U.S. market for subprime
mortgages, Buffett said: "Subprime is a real problem, but there
are always problems. But we will get through it. How much pain it
will produce, I don't know. It will be significant."
Buffett was speaking at the opening of a factory owned by
Israel's Iscar International Metalworking Cos, in which Berkshire
has an 80 percent stake.