Then:
On Korean stocks
- Citicorp sent him a manual on Korean stocks
- Within 5 or 6 hours, and found 20 stocks selling at 2 or 3x earnings with strong balance sheets
- Korea rebuilt itself in a big way post 1998. Companies overbuilt their balance sheets
- Daehan Flour Mill – 15,000 won/year earning power. Stock was selling at 2 and change times earnings.
- Warren’s strategy was to buy the securities of 20 companies thereby spreading his risk. Some of the companies will be run by crooks.
- He doesn’t know any of the companies and he’s never been to Korea before. Information on these companies is available over the Internet in English.
- Also, the won has strengthened, which was an added bonus.
- The investment presented an opportunity to make 150% at which point the stocks would still only be selling at 7 or 8x
- It’s ridiculous to say there’s an efficient market.
- They put $100MM into this by doing very little work.
...Visited in 2007
Now:
The billionaire yesterday told reporters he had a book about South Korea’s publicly-traded companies that he studied for possible investments, and had bought a stock for his personal portfolio...Buffett said he would consider only investing in South Korean companies if he was starting an investment firm from scratch because of the extent of their undervaluation.
Buffett told reporters Sunday (local time) that the world's 13th largest economy will better weather the current global economic downturn than other major economies, and will resume an ascent as soon as the world economy returns to normal. He held a press conference after Berkshire's shareholders' meeting in Omaha, Nebraska.
``The Korean economy will cruise smoothly over the next few years. In particular, the manufacturing sector has achieved an outstanding performance over the years and will do the same in the future. Berkshire is now seriously considering purchasing shares of several Korean companies,'' he said.
