Can you name Warren Buffett's next big purchase?

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Posted: Sunday, January 6, 2013 12:00 am

It's a new year, and Warren Buffett is still hunting elephants.

Do you have an idea which one he'll bag first?

If so, tell us the name of the company you believe Buffett will buy, along with the reasons for your choice and your contact information. We'll define an “elephant” as an acquisition costing $5 billion or more, not counting buybacks of Berkshire stock or “bolt-on” acquisitions by existing Berkshire companies.

We'll keep your target confidential while we wait for Buffett to pull the trigger. One suggestion per person, please.

If Buffett makes a really big acquisition in 2013 and one or more of you picks the right company, we'll do a story. (We'll probably do a story if nobody makes the right pick, too.)

Here's the deal:

In February 2011, Buffett, chairman and CEO of Berkshire Hathaway Inc. of Omaha, told his shareholders he was on the prowl for big businesses to buy. “We will need both good performance from our current businesses and more major acquisitions. We're prepared. Our elephant gun has been reloaded, and my trigger finger is itchy.”

Last year Buffett's big-game expedition came up dry, and his pile of cash “ammunition” steadily grew.

You can send your choices to the email listed at the end of this story or via regular mail to:

Steve Jordon

The World-Herald

1314 Douglas St., Suite 700

Omaha, NE 68102

Omaha, NE 68102

Trapped in work

Buffett's recent radio interview with the BBC prompted commentary in other U.K. media, including musings by Colette Douglas Home in the Glasgow (Scotland) Herald about the burden of work placed on men by society.

Buffett had told the radio interviewer — Melinda Gates, a co-trustee with Buffett of the Bill & Melinda Gates Foundation — that his sisters were just as smart as he but, according to society's dictates at the time, were expected to make good marriages, while he and other males were expected to fulfill their career potential.

The system limited Doris and Roberta, Buffett said. But Home said the system also pressured Buffett and others to succeed in their work.

“Mr. Buffett was well-suited to it. He went on to make a fortune so large that he remains super-rich after giving half of it to charitable causes,” Home wrote.

“But how many men down the ages have felt the hand of financial failure on their shoulder and deemed themselves worthless because of it? How many worked themselves into an early grave, driven by the tyranny of the bills: spurred ever onward by the need to keep a roof over their family?”

Some may think women are replacing men in the workforce, Home wrote. “I think they are releasing men. Doesn't this offer men a flexibility their predecessors could only dream about? Where women were once trapped in the home, weren't men equally trapped in work?

“I hope the fact that women workers outnumber men in some regions of the U.K. will allow their partners to lay down some of their load, not threaten their masculinity. ... We held on to the stereotype of the male provider long after ditching the fiction of the home-baking housewife.”

Buffett said women are essential to the economy.

“Fifty percent of the talent in the country, we've pushed off in the corner for almost 200 years,” he said. “Now that we're ... starting to use 100 percent of our talent, it makes me very optimistic.”

Buffett to the defense?

While President Barack Obama was weighing whether to nominate former Nebraskan Chuck Hagel as secretary of defense, Foreign Policy magazine listed some people with qualities who would fit the job, including Buffett.

He would oversee “value investing” in defense, identify the enemy's advantages and minimize the country's long-term vulnerabilities, Kori Schake wrote.

Buffett's letters to Berkshire shareholders indicate he would do well managing Congress, Schake wrote. “Picking winners is the Sage of Omaha's genius, which could be an enormous advantage when turned on the defense industry, emergent technologies, wars, and military leadership; Napoleon promoted his generals by that criteria. And God knows the president owes Buffett.”

Buffett, however, has a box on his desk for such proposals. The box is labeled: “Too hard.”

NetJets in China

Entrepreneurs may be getting rich in China, but they can't take full advantage of their wealth until they get one of the new NetJets cards.

“The United States is our largest market,” Jordan Hansell, chairman and CEO of Berkshire's NetJets division, told Meng Jing of the European edition of China Daily. “But China certainly has the potential to grow into the largest market for us in the future.”

NetJets is tailoring a private-jet “global” card for China's rapidly developing luxury air travel market. For $360,000, you and your group can fly for 25 hours among China, Europe and the United States or within the U.S. or Europe.

NetJets China Business Aviation Limited is a joint venture with Fung Investments of Hong Kong, related to the families of Victor and William Fung, and the private-equity fund Hony Capital of Beijing. Based on the southern coast of Guangdong province, it plans to offer domestic charter flights and aircraft maintenance services.

“Since we are about to open business here and we haven't marketed here before, we think the new card can be a good first step for us,” Hansell said. “We've noticed China's wealthy businessmen are more and more global, but our focus here is still China's domestic market.”

Math challenges

Our illustration for the Dec. 23 Warren Watch had a wayward dollar sign, which some readers (including a CPA) pointed out. The math problem showed Berkshire's $184.6 billion in shareholder equity being divided by the number of shares, but the dollar sign was on the shares and not the equity.

It's one of those math mistakes you'd love to have to worry about, and brings to mind a story about the fellow who barely made it through high school but made millions by his 20th class reunion. Classmates wondered how he had succeeded.

“I found a product you could make for $2 and sell for $5,” he explained proudly. “You'd be amazed how quickly that 3 percent profit adds up.”

The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

Contact the writer:

402-444-1080, steve.jordon@owh.com

twitter.com/buffettOWH

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