For Buffett, It May Be "Elephant Time"

In an interview with Charlie Rose on PBS, Warren Buffett once referenced the constraints of doing deals due to Berkshire Hathaway's market cap. He chuckled that he was looking for "elephants" -- because Berkshire's size ruled out buying or investing in all but large outfits.

Karen Richardson writes in The Wall Street Journal's "Heard on the Street" column that Buffett may be close to putting some of Berkshire's $50-billion cash hoard to work:

The bond market has seized up, stocks are in turmoil, private-equity funds are sidelined and hedge-fund managers and lenders are hosting fire sales.

These are happy days for Warren Buffett.

"I can spend money faster than Imelda Marcos when things are right," he says, referring to the former Philippines first lady and renowned shopper. For the past three years, Mr. Buffett's traditional bargain-hunting investment strategy has been partly stymied as debt-fueled private-equity funds and hedge funds drove asset prices out of his value-investing orbit.

If the subprime mess turns out as bad as many think, Buffett could be the "last man standing." Picking over the bones, buying assets on the cheap. Some of the companies or loan portfolios to be scooped up might just qualify as the elephants Buffett told Rose about. But instead of chuckling, he'll end up laughing -- all the way to the bank.

Comments

[Andy]

I couldn't agree more. Buffett has been waiting for a long time for the market attitude to change from greed to fear. Now that much of the market has gone fearful, he'll happily get greedy.

In the interests of full disclosure, I am happy to say that I have an interest in his happiness.

[John]

Andy: I should have bought shares in Buffett's company during the tech boom, when people were thinking he was a dinosaur. I never bit at the internet or tech bubble stocks, but still.

[Aaron]

Exactly. Buffett will take advantage of the fear and be greedy, and he will profit from it. The fear of the uneducated investor will end up profiting the best investor again.