|
Omaha, Nebraska: Billionaire investor Warren Buffett stepped into a debate about the emergence of sovereign wealth funds, saying the government-controlled firms are fuelled by US spending overseas, not political motives.
"This is our doing, not some plot by foreign governments," Buffett, the chairman of Berkshire Hathaway Inc., said on Friday in his annual letter to shareholders.
"Our trade equation guarantees massive foreign investment in the US. When we force-feed $2 billion daily to the rest of the world, they must invest in something here."
Purchasing power
Several emerging countries have deployed record central bank reserves to set up funds wielding as much as $2.9 trillion. Firms from Singapore, Korea, Kuwait and Abu Dhabi bought stakes during the past four months in Citigroup Inc, the biggest US bank by assets, and Merrill Lynch & Co, the world's biggest brokerage.
Officials from the US Treasury Department and the Securities and Exchange Commission have said there's a risk government-controlled funds may invest to achieve political, rather than commercial, ends.
"He's right that we're the ones that created the problem in the first place," said Mohnish Pabrai, who manages $600 million at Pabrai Investment Funds in Irvine, California.
"The US is better off if foreign governments buy Treasuries, because we have a printing press for them, but if I were running China's money, I'd be buying US companies, oil reserves, hard assets too."
In last year's letter, Buffett said his method was to "be fearful when others are greedy, and be greedy when others are fearful."
Buffett revealed in last year's letter his decision to split the roles of chief executive officer and chief investment officer when he steps down. He previously said the CEO spot will go to one of three Berkshire managers, whom he hasn't identified. He has said his health is good and he has no plans to retire.
"Both the growth in size and number of these funds is such now that vigilance is required," Deputy US Treasury Secretary Robert Kimmitt said in a February 27 interview on Bloomberg Television.
SEC Chairman Christopher Cox said in December last year that the state-run investment firms don't adequately disclose why they are buying stocks and other assets.
Profile: Stock up 4,700% in 20 years
Buffett, 77, built Berkshire Hathaway over four decades from a failing textile manufacturer into a $215 billion investment and holding company.
The stock rose 29 per cent in 2007 and about 4,700 per cent in the last 20 years through December 31, six times more than the Standard & Poor's 500 Index, dividends included.
The feat made Buffett an icon to shareholders and investors.
In his annual letter, Buffett offers his view of market conditions, potential investments, corporate governance and economic policy, as well as his plans for Omaha, Nebraska-based Berkshire.
|
