Berkshire Hathaway Inc. is on the hunt for more deals similar to its planned purchase of H.J. Heinz Co., Warren Buffett, the conglomerate’s chief executive, said on Monday.
“If we get a chance to buy another Heinz, we will do that,” Buffett said on CNBC-TV.
Berkshire likes the ketchup maker’s business, the deal’s $23-billion (U.S.) price, and its partner in the transaction, private equity firm 3G Capital, Buffett said in an extended interview.
“We hope to own Heinz 100 years from now,” Buffett said. “If you own great brands and you take care of them, they’re terrific assets.”
Buffett said he is not currently eyeing another consumer– products company, but is looking at a possible deal in a sector he would not disclose. After a recent binge of buying newspapers, he said he is not interested in buying the Chicago Tribune or the Los Angeles Times from the Tribune Co. However, he has been buying papers in smaller communities and said Friday he planned to continue doing so.
After the Heinz purchase was announced, the U.S. Securities and Exchange Commission filed a lawsuit against unnamed traders the agency said used a Goldman Sachs account in Switzerland to trade on purported inside knowledge of the transaction. Buffett said Berkshire likes to move quickly on deals to avoid information leaks, and said he could “guarantee” the person who made questionable options trades ahead of the deal was acting on inside information.
“They will nail that guy, and they should,” he said.
Monday’s interview followed the release Friday of Buffett’s annual letter to Berkshire shareholders. In the closely followed missive, the billionaire investor said Berkshire may end a long streak of outperforming the S&P 500 this year. For the first time, the growth in Berkshire’s book value per share may underperform the growth in the stock index when measured over a five-year period.
In the interview, Buffett said Berkshire is buying stocks because they are cheaper than other types of investments. “We are buying them not because we expect them to go up,” he said. “We’re buying them because we think we’re getting good value for them.”
Buffett remained optimistic about the U.S. economy despite gridlock in Washington over fiscal issues and a tepid economic recovery. “It hasn’t taken off,” he said of the recovery, “but it hasn’t stopped.”
In the CNBC interview, Buffett said he will be giving Berkshire money managers Todd Combs and Ted Weschler more money to invest after a successful year. As of March 31, they will both manage about $6-billion each, up from $5-billion apiece, Buffett said.
“Todd and Ted are young and will be around to manage Berkshire’s massive portfolio long after (Berkshire Vice Chairman) Charlie (Munger) and I have left the scene,” Buffett wrote in Friday’s letter. “You can rest easy when they take over.”
One of the stocks that Berkshire has an interest in is Bank of America Corp. In August 2011, Buffett purchased $5-billion in preferred shares as the U.S. bank was struggling amid concerns about its capital levels. The deal also included warrants that allow Berkshire to buy 700 million shares of the bank’s common stock at a price of $7.14 over 10 years. The shares are currently trading above $11.
“They are doing the right things,” he said of Bank of America. “..over time, they will do well.”
Buffett also cleared up the mystery around the “credentialed bear” investor who will get a chance to ask questions at Berkshire’s annual shareholder meeting this spring: Hedge fund manager, Doug Kass. Kass took to Twitter to say “I am going to Disneyland, I mean Omaha!” to take part in the meeting in May.