'Britain's Warren Buffett' explains why the Berkshire Hathaway chief isn't striking many deals, and shares 1 key lesson from the investor that he's applying today
Warren Buffett famously struck lucrative deals with Goldman Sachs, General Electric, and other struggling companies during the financial crisis. He wasn't able to repeat the feat during the coronavirus crash because the banks were in better shape and the government provided aid, a fund manager dubbed "Britain's Warren Buffett" told Business Insider. "There just haven't been the opportunities this time around," said Keith Ashworth-Lord, investment chief of Sanford DeLand, which manages the SDL Buffettology Fund. Ashworth-Lord also shared the Buffett strategy he's found most useful during the crisis. "The most important lesson is to switch off markets and concentrate all your effort on assessing what a business is really worth and what you are being asked to pay for it," he said. Visit Business Insider's homepage for more stories.
Warren Buffett has been slammed as "washed up" and urged to reinvent himself after failing to deploy his Berkshire Hathaway conglomerate's massive cash pile during the coronavirus crash. A fund manager dubbed "Britain's Warren Buffett" isn't surprised by claims that his namesake is past his prime. "I wish I had a tenner [£10] for every time I have heard that criticism of Warren Buffett aired!" —Keith Ashworth-Lord, investment chief of Sanford DeLand, which manages the SDL Buffettology Fund, told Business Insider this week. The SDL Buffettology Fund has drawn on Buffett's investing principles to return more than 220% since it was launched in 2009. Buffett famously swooped in as a "lender of last resort" to Goldman Sachs, General Electric, and other companies during the financial crisis. The Berkshire chief hasn't struck the same deals this time around because the big banks are better financed and governments have moved quickly to bail out struggling businesses, Ashworth-Lord said. "There just haven't been the opportunities this time around," he added. Buffett might not be playing the white knight, but the billionaire investor's teachings are still useful for navigating the current environment, Ashworth-Lord said. "The most important lesson is to switch off markets and concentrate all your effort on assessing what a business is really worth and what you are being asked to pay for it," he said, referring to Buffett's view that investors buy parts of companies and shouldn't be distracted by stock-price movements. When others panic and sell, shrewd investors can buy a piece of a quality business on the cheap. Buffett famously summed that up by advising to "be greedy when others are fearful." "Bear markets eventually pass and it is in times of panic that the best pricing opportunities arise," Ashworth-Lord said. He also warned against trying to time markets, instead recommending a "steady drip of investment in at regular intervals." Ashworth-Lord also shared what he expects from Buffett in the coming weeks. "Given the amount of cash that Berkshire is sitting on and where prices are today, I would have thought that buybacks come into the frame," he said. Indeed, it appears that Buffett may have repurchased more than $5 billion worth of Berkshire stock in recent weeks. However, the investor's focus on value could limit his options when it comes to buying stocks or making acquisitions. "Buffett has repeatedly said that he doesn't see bargain basement prices on offer yet," Ashworth-Lord said.Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America
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Warren Buffett's Berkshire Hathaway is set to plow more than $550 million into Snowflake when the cloud-data company goes public
Summary List Placement Warren Buffett's Berkshire Hathaway is set to invest more than $550 million in...Summary List Placement Warren Buffett's Berkshire Hathaway is set to invest more than $550 million in Snowflake when it goes public, according to the cloud-data group's amended S-1 filing. The billionaire investor's company will buy about 3.1 million Class A shares in a private placement, and purchase another 4 million shares from former Snowflake CEO Robert Muglia. Salesforce's strategic venture arm has also agreed to invest $250 million in Snowflake stock. Berkshire's bet is striking as Buffett has historically stuck to companies he understands, and joins a string of unusual moves from Berkshire, such as investing in a gold miner and acquiring 5% stakes in five Japanese trading companies. Visit Business Insider's homepage for more stories. Warren Buffett's Berkshire Hathaway has agreed to invest $250 million in Snowflake when it goes public in the coming weeks, according to the cloud-data company's amended S-1 filing. The famed investor's conglomerate will purchase roughly 3.1 million Class A shares in a private placement, based on the $80 midpoint of Snowflake's expected IPO price range of $75 to $85. Buffett's company has also agreed to buy another 4 million Class A shares from former Snowflake CEO Robert Muglia in a secondary transaction, paying the IPO price for each share. That could cost it $303 million to $344 million based on the expected price range. Read more: Bank of America lays out the under-the-radar indicators showing that huge swaths of the stock market are 'running on fumes' — and warns a September meltdown may just be getting started If both purchases go through, Berkshire might spend upwards of $550 million for more than 7 million shares, representing about 19% of the 38.3 million Class A shares that Snowflake expects to be outstanding after its offering. Salesforce has also agreed to purchase $250 million of Snowflake stock through its strategic venture arm, Salesforce Ventures, the filing shows. Snowflake declined to comment in an email to Business Insider. Read more: GOLDMAN SACHS: Buy these 19 stocks right now for big future gains once a COVID-19 vaccine is available Berkshire's latest bet is striking as Buffett famously eschews tech stocks, preferring to invest in businesses he understands. It joins a flurry of surprising moves from his company, including its first investment in a gold miner and deep cuts to its stakes in JPMorgan, Wells Fargo, and other financial companies last quarter. Buffett's company also disclosed 5% stakes in the five biggest Japanese trading companies or "sogo shosha" last week, and bought $2.1 billion of Bank of America stock over 12 straight trading days to August 4. Snowflake was founded in 2012 and privately valued at $12.4 billion in February. Its revenues surged 121% year-on-year to $133 million in the the three months to July 31, helping to narrow its operating loss by 19% to $78 million.Join the conversation about this story » NOW WATCH: Here's what happens when two hurricanes collide
Summary List Placement Warren Buffett's Berkshire Hathaway has sold about 101 million Wells Fargo shares in...Summary List Placement Warren Buffett's Berkshire Hathaway has sold about 101 million Wells Fargo shares in recent weeks, a regulatory filing shows. The billionaire investor's company cut its holdings by about 43% to 136 million shares, slashing its stake to 3.3%. The sales come after Berkshire sold 25% of its Wells Fargo position in the second quarter. Berkshire was previously Wells Fargo's largest shareholder, and Wells Fargo was one of its five most valuable positions earlier this year. Visit Business Insider's homepage for more stories. Warren Buffett's Berkshire Hathaway has dumped another 101 million of its Wells Fargo shares, according to a regulatory filing on Friday. The famed investor's conglomerate already slashed its stake in the banking giant by 25% to about 238 million shares in the second quarter. Berkshire has continued selling since then, cutting its stake by another 43% to 136 million shares, the filing shows. It now holds a 3.3% stake in the bank. Read More: A UBS real estate-investing chief told us 5 ways investors can profit from the pandemic's transformation of how Americans live and work — including the housing markets poised to boom Berkshire was previously Wells Fargo's biggest shareholder, owning 323 million shares or a 7.8% stake earlier this year. The bank also ranked among Berkshire's five most valuable holdings earlier just a few months ago. Buffett may have soured on the company because of the blow to its reputation from its fake-accounts scandal, and the cap on its assets imposed by federal regulators in 2018, David Kass, a finance professor at the University of Maryland, told Business Insider last month. Wells Fargo's stock price has slumped about 54% this year to below $25, meaning Berkshire's 136 million shares were worth around $3.4 billion as of Friday's close. Berkshire sold a bunch of financial stocks last quarter. It slashed its JPMorgan stake by more than 60%, exited its Goldman Sachs position, and sold shares of BNY Mellon, PNC Financial, US Bancorp, Visa, and Mastercard, among others.Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
Warren Buffett plowed $3 billion into General Electric during the financial crisis. Here's the story of how he helped the industrial titan.
Warren Buffett plowed $3 billion into General Electric during the financial crisis, when the industrials giant's...Warren Buffett plowed $3 billion into General Electric during the financial crisis, when the industrials giant's financing arm was suffering from the credit crunch. In exchange, Buffett received $3 billion in preferred stock paying a 10% annual dividend, plus warrants to buy $3 billion in common stock at a fixed price in the future. Buffett's Berkshire Hathaway raked in about $1.5 billion from the deal, but the famed investor revealed years later that he could have made more. "We actually didn't push it to the limit because there really wasn't anybody else around." Visit Business Insider's homepage for more stories. Warren Buffett invested $3 billion in General Electric in October 2008, handing vital cash to the industrial titan just as credit markets seized up and global demand slumped. Weathering the storm GE CEO Jeff Immelt had issued a profit warning in late September, citing "unprecedented weakness and volatility in the financial services markets." The credit crunch was especially bad news for GE Capital, the group's massive financing division that loaned money to consumers and businesses. Immelt cut the dividend that GE Capital paid to headquarters, halted share buybacks, and put further borrowing plans on hold. He also moved up his goal to reduce GE's reliance on financing profits to the end of 2009. GE's stock price had plunged by roughly a third since the start of 2008. However, its market capitalization was still more than $245 billion, making it the country's second-most valuable public company after Exxon. Read more: Jefferies created a 6-step process for finding companies that will keep paying strong dividends — and landed on these 20 global stocks as 'rock-solid' picks Faced with the monumental challenge of reshaping GE and riding out a brutal downturn, Immelt and his team decided they could use a "rainy-day fund" or a "backup to a backup," The Wall Street Journal reported at the time. Days after Buffett agreed to plow $5 billion into Goldman Sachs, Immelt contacted the Berkshire Hathaway boss to propose a similar deal, The Journal said. The pair shook hands on Berkshire investing $3 billion in GE in exchange for preferred stock paying a 10% annual dividend. GE would be allowed to redeem the shares at a 10% premium after three years. The investor also secured warrants enabling Berkshire to purchase 135 million of GE's common shares for $22.25 each — close to its stock price at the time — at any point in the next five years. 'Insurance is expensive, especially when you buy it from Warren Buffett' GE accepted Buffett's terms because the famed investor provided more than money; his backing was also a vote of confidence in its future. "GE is the symbol of American business to the world," Buffett said in the press release announcing the deal. "I am confident that GE will continue to be successful in the years to come." Immelt added that Buffett's cash, plus at least $12 billion from a public stock offering, would boost GE's flexibility, help it execute its plans faster, and allow it to "play offense in this market should conditions allow." Read more: A 30-year market veteran explains why we're in 'one of the nutsiest bubbles in the history of bubbledom' — and warns of an 'underwater' economy for the next several years GE's shareholders recognized Buffett's money was a useful cushion for the company. "It's an insurance policy in case things get worse," fund manager Wayne Titche told The Journal at the time. "In today's market, better safe than sorry." However, they still balked at the high interest rate and bemoaned the dilution of existing investors' shares. "Insurance is expensive, especially when you buy it from Warren Buffett," shareholder Arthur Rice told the newspaper. Buffett trumpeted the GE deal, as well as similar bets on Goldman Sachs and Wrigley, in his 2008 letter to shareholders. "We very much like these commitments, which carry high current yields that, in themselves, make the investments more than satisfactory," he said. In all three cases, Berkshire acquired "substantial equity participation as a bonus," he added. Buffett raked in $1.5 billion — and could have made more Berkshire received $3.3 billion when GE redeemed its preferred stock in October 2011, as well as $900 million in dividends in the intervening three years. The pair also amended Berkshire's warrants in 2013 to allow the conglomerate to exercise them without spending any cash. It received 10.7 million shares as a result, which it eventually sold them for about $315 million in 2017. Between the $300 million premium, the dividends, and the proceeds from the share sales, Berkshire raked in about $1.5 billion in profit or a 50% return. Read more: Famed investor Jim Rogers earned a 4,200% return with George Soros. He explains why the US response to COVID-19 is 'embarrassing' — and breaks down 4 purchases he's made amid the fallout. Moreover, Buffett revealed at Berkshire's annual meeting in 2018 — almost a decade after the deal — that he could have driven a harder bargain, but cut GE some slack given the extraordinary circumstances. "They were going to take the terms we offered," he said, according to a transcript on Sentieo, a financial-research site. "But we actually didn't push it to the limit because there really wasn't anybody else around."Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid