Warren Buffett, billionaire investor, said recently on CNBC that he purchased stocks during the big selloff that took place recently.
He would not name any names. He would not say if he was adding to his current holdings. But he described the stocks that he purchased during an interview on “Squawk Box” as being “names that you’d recognize.”
Buffett said that he likes to purchase stocks when they are going down, not when they rise up. “The more [the market] goes down, the more I like to buy.” He also added that trying to predict the timing of the market by buying and selling individual stocks is quite often a “fool’s game.”
Buffett said that any investor who has owned a cross-section of businesses in America has done very well for the past 10 or 20 years. Values do appreciate over time – but not for every single stock, he said, adding that during his lifetime the Dow Jones Industrial Average was below 100.
With all the Wall Street talk going on about when and about how much the Federal Reserve will begin to increase interest rates, Buffett mentioned that the moves of the central bank have no bearing whatsoever on his overall investment strategies. “I really don’t care about whether the Fed is going to raise interest rates.”
Buffett mentioned that he purchases businesses that he feels will be good for the next 50 years – such as the deal that he announced during his interview on CNBC where he said that he is going to buy the largest privately held car dealership group in the nation, the Van Tuyl Group.
The Capitulation at Coca-Cola
Another topic of conversation was when Buffett addressed the newly overhauled executive compensation plan at Coca-Cola, saying in that it “makes great, great sense.”
Earlier in the year, Warren Buffett chose not to vote on the controversial equity compensation plan at the beverage maker, and he called it “excessive.”
But after some tweaks were made that shift it around compensation toward cash focused payments and away from stock options, Buffett said that this newer plan is “totally logical from a shareholder standpoint and from the standpoint of motivating employees.”
David Winters, activist investor and the chief executive officer of Wintergreen Advisers, spoke out against the original plan from Coca-Cola and pressured them to change it. Winters told “Closing Bell” on CNBC, “This new release is an improvement. But there’s more to go to improve Coke’s margins.”
Buffett then spoke about Burger King’s plans to acquire Tim Hortons, based out of Ontario, Canada for around $11 billion. This will create a new company that is based in Canada, but the deal has nothing to do with a necessity or desire to pay lower taxes.
Buffett is going to help fund this deal by providing $3 billion of preferred equity financing.
“Most inversion deals have a big tax motivation, but this one didn’t,” said the boss of Berkshire Hathaway.
He told us that the highest federal tax bill of Burger King in recent years was only $30 million. If Burger King chose to borrow money and move Hortons to the United States, it would spend a lot more than that, said Buffett.
Buffett chose not to comment on whether he agrees with Pres. Barack Obama about tax inversions deals being unpatriotic.
But he did mention that he believes that we should change the US corporate tax code so that companies in America would not have such a major disadvantage on the world stage. Many of the European countries and elsewhere have lower business taxes when compared to the United States.