No Companies to Buy in 2004, Buffett Says

[HenryTo]

From the NY Times. A history of Berkshire Hathaway's annual reports is right here: http://www.berkshirehathaway.com/annual.html

The 2004 report was just released yesterday.
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No Companies to Buy in 2004, Buffett Says
By THE ASSOCIATED PRESS

Filed at 7:38 p.m. ET

OMAHA, Neb. (AP) -- The mighty billionaire Warren Buffett says he has ``struck out.'' The CEO of Berkshire Hathaway Inc. wrote in his annual report Saturday that he had hoped to make several multibillion-dollar acquisitions in 2004. He certainly had the money, so the problem? None to buy, he said.

``I found very few attractive securities to buy,'' Buffett wrote in his company's 40th annual report. Berkshire ended the year with $43 billion of cash equivalents, something he called ``not a happy position.''

The bulk of the letter was positive, and the 74-year-old investment icon said he and Vice Chairman Charlie Munger would not be deterred.

``Charlie and I will work to translate some of this hoard into more interesting assets during 2005, though we can't promise success,'' he wrote.

Buffett, known widely as the `` Oracle of Omaha'' for his insight into all things financial, was mum on the subject of an investigation of alleged bid-rigging and price-fixing in the insurance industry by New York Attorney General Eliot Spitzer. Buffett received a subpoena in January and has said he would cooperate. His insurance holdings include auto insurer Geico.

It's no surprise he wasn't able to find any companies to acquire last year, because it's a seller's market and there's a lot of activity in mergers and acquisitions, said Steve Kaplan, a professor at the University of Chicago Graduate School of Business.

``He won't find anything this year either,'' Kaplan said. ``Since he likes to buy things cheap, it's harder to find.''

Shares of Berkshire Hathaway class-A stock fell $302, or less than 1 percent, to close at $89,300 Friday on the New York Stock Exchange.

Berkshire's profit fell 10 percent from nearly $8.2 billion in 2003 to $7.3 billion last year. However, its fourth-quarter results were strong, with net earnings climbing to $3.34 billion, up some 40 percent from the same period in 2003.

In his letter to shareholders, Buffett highlighted the company's gains in book value -- which determines value by looking at a company's assets minus its liabilities -- as opposed to its true market value of about $135 billion, or nearly $90,000 per share.

He said Berkshire Hathaway posted a gain in book value net worth of $8.3 billion in 2004, a per-share increase of 10.5 percent and just short of the S&P 500's gain of 10.9 percent last year. In 2003, the company saw a 21 percent increase in book value while the S&P 500 grew by 28.7 percent.

A call to Berkshire Hathaway offices seeking comment Saturday was not immediately returned.

Berkshire owned about $21.4 billion in foreign currency spread among a dozen countries at the end of the year. Buffett said this hedge against the U.S. dollar does not mean he is unpatriotic, but he voiced a warning about the nation's growing trade and fiscal deficits.

The holding company owns businesses and stock in a wide variety of industries, including insurance, furniture, restaurants, candy and newspapers.