In all the uncertainty in this world, in all the fear and loathing over whether we are or are not in recession, in all the worries about the future of corporate America, there is one concept every American can understand and cling to: “Classic Buffett.”
This easy phrase refers to pretty much any investment made by Warren Buffett, the Oracle of Omaha. His mystical power to make good investment decisions has caused some observers to label as “Classic Buffett” even deals that no one would have predicted before. No matter how unexpected the deal he does, no matter how unusual the structure, the minute Berkshire Hathaway’s fingerprint appears on a deal, it is ‘Classic Buffett.’
This has applied to moves as wide-ranging as the launch of Berkshire Hathaway Assurance for the municipal bond business–even though the original entry into the insurance business was only arguably Classic Buffett–to the acquisition of the Pritzker family’s Marmon holdings in a two-step deal, and to today’s acquisition of Wm. Wrigley Jr., in which Buffett is joining with acquirer Mars and committing $4.4 billion of subordinated debt financing. The Wrigley deal, which includes a household name as familiar as Buffett’s beloved Coca-Cola, looks like Classic Buffett because it is an item you see in stores, which reinforces Buffett’s avoidance of schmancy, hard-to-grasp concepts.
So what is Classic Buffett, exactly? According to different commentators, it includes scooping up an industry-leading company when the time and price are right; acquiring a boring firm with stable earnings; expanding his dominance; and exploiting Berkshire’s sterling financial position to take advantage of a market breakdown.
They all sound pretty much like good merger strategies.
But perhaps one of the best guides to Classic Buffett came from the man himself, when he wrote in a shareholder letter that one his rules was to was be fearful when others are greedy, and be greedy when others are fearful. Classic Buffett, it seems, is not too conventional or classic at all.
Share Investor Stockmarket forum -Discuss this topic further
Share Investor Forum's new member GIVEAWAY!!