Matthew Lynn wonders in The Spectator how Warren Buffett's approach will translate in Europe. (Recall that Buffett spent a week in May touring the Continent.)
An interesting bit:
Sometimes Buffett buys a whole company, such as the Fruit of the Loom clothing brand or the insurance business General Re. Sometimes he just buys a big stake: 8 per cent of Coca-Cola, or 13 per cent of American Express. Other times, he just trades in and out of opportunities he likes the look of: he bought 11 per cent of PetroChina in 2006 and sold out the following year at a $3.5 billion profit.
Further down, Lynn points out something you've read me (and others no doubt) say previously. That Berkshire's size rules out Buffett and Charlie Munger buying loads of companies out there:
When you’re managing a $200 billion conglomerate you need some big deals to make a difference to your return on equity. Buffett likes to buy well-established businesses with managements that he trusts and can leave in charge. In the US, he is competing with the massive firepower of the private-equity industry for precisely those kinds of companies. In Europe, where private equity has been much slower to get off the ground, there may well be less competition. ‘We’re looking for businesses like Nestlé that are quite understandable,’ he said in Switzerland. Were the likes of Nestlé to be in play in the US, however, a private-equity company would almost certainly grab it.
Lynn finishes his piece by elaborating on the risks Buffett may encounter -- yet also makes an excellent point about the Swiss or German or Italian way of business being more up Buffett's alley after all.
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