Warren Buffett keeps out of the depreciating dollar David Teather in New York Monday March 8, 2004 The Guardian
Warren Buffett, the second wealthiest man in the world, continued to bet against the dollar last year, increasing his company's ownership of foreign currencies to $12bn. The figure was disclosed in the eagerly anticipated annual letter from the "Oracle of Omaha" to shareholders in his Berkshire Hathaway company, in which he routinely delivers nuggets of his own peculiar brand of homespun wisdom. In the 24-page letter, sent out on Saturday, the 73-year-old, returned to many of his favourite themes. He attacked the Bush administration's tax cuts and railed against greedy chief executives, corrupt mutual fund managers and ineffective independent directors. Thousands will be making the pilgrimage to the company's annual meeting in Omaha on May 1, known as "Woodstock for capitalists". Berkshire Hathaway reluctantly entered the foreign currency for the first time in 2002 and Mr Buffett said it had enlarged its position last year, increasing its holdings in five unnamed currencies. He put the blame on the ballooning US trade deficit. He said that in late 2002 foreign investors began "choking" on the flood of dollars. "As an American, I hope there is a benign ending to this problem," he said, though he warned that the situation was unlikely to improve. "Whether foreign investors like it or not, they will continue to be flooded with dollars. The consequences of this are anybody's guess. They could, however, be troublesome - and reach, in fact, well beyond currency markets." Mr Buffett, whose commonsense strategy has earned him a legion of fans, built the company's fortune by canny investments in companies including American Express, Coca-Cola and Gillette. More recently he has taken to buying businesses outright as it became more difficult to find undervalued stocks. Equity holdings are now down to 50% of Berkshire Hathaway's net worth. Last year, the company again stayed away from the equities market. Mr Buffett said Berkshire had bought some shares in the bank Wells Fargo but otherwise had not changed its position in its top six holdings. "Brokers don't love us," he said. "We own pieces of excellent businesses but their current prices reflect their value." The company, which owns several insurance businesses as well as house builders, clothing and confectionary firms, reported $8.1bn in profits, compared with $4.3bn in 2002. The company has $36bn in cash and Mr Buffett remains on the hunt for further acquisitions. An $8bn investment in junk bonds during 2002 paid off but he stopped buying last year as prices rose. He offered stinging criticism of the mutual fund industry, which has become the latest Wall Street business to find itself under scrutiny for improper practices. Mr Buffett said the industry had "betrayed the trust" of millions of shareholders. "Hundreds of industry insiders had to know what was going on, yet none publicly said a word."
