Berkshire Hathaway Inc.'s (NYSE:BRK.A) annual shareholder meeting on Saturday will have an unfamiliar challenge that it has only had to face twice in Warren Buffett's 44-year involvement in the company: how to rebound from a losing year.
The per-share book value of both of Berkshire's Class A and Class B stock dropped 9.6% in 2008, accounting for a net worth loss of $11.5 billion, with the only other losing year occurring in 2001 during the U.S.' last recession. The loss exemplifies how even Buffett, who is regarded as a sage investor, having grown his company at 20.3% annually over the course of his four decade reign, wasn't immune to the credit tsunami that ails the U.S. financial system.
But during the economic storm of 2008, Buffett didn't stand pat, seeing opportunity that may pay off dividends in 2009 and beyond. Here's a brief rundown from The Deal Pipeline of some of Buffett's biggest deals in 2008 that he'll likely discuss at the shareholder meeting:
Berkshire Hathaway Inc. 2008 M&A Deals |
| Target |
Date of deal |
Amount |
| York Simpson Underwood |
12/16/2008 |
N.A. |
| Coachmen Industries Inc. - recreational vehicle business |
12/01/2008 |
$42 million |
| Stake in General Electric Co. |
10/01/2008 |
$3 billion |
| Stake in Goldman Sachs Group Inc. |
9/23/2008 |
$5 billion |
| Stake in Rohm and Haas Co. |
7/10/2008 |
$18.8 billion |
| Stake in Wm. Wrigley Jr. Co. |
4/28/2008 |
$23 billion |
| White Mountains Insurance Group Ltd. - runoff businesses |
3/10/2008 |
$836 million |
| 3% stake in Swiss Reinsurance Co. |
1/23/2008 |
$1.2 billion |
Source: The Deal Pipeline |
With Berkshire ending 2008 with $25.58 billion in cash and a bevy of quality companies hitting the auction block or simply looking for cash, Buffett's appetite for deals will remain strong in 2009.
"The larger the company, the greater will be our interest: We would like to make an acquisition in the $ 5 (billion) - $20 billion range," Buffett told Reuters. "We prefer to buy in cash, but will consider issuing stock when we receive as much in intrinsic business value as we give." - Gerald Magpily
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