Buffett, Not Exactly Bullish, Shrugs Off Goldman IPO

Also, the Oracle of Omaha on REITs and foreign investments.
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OMAHA, Neb. -- Speaking this evening to representatives of nearly 60 news organizations gathered here from around the world to hear his views of the investment climate, the Oracle of Omaha's tenor was one of caution but not heightened concern.

"We've never had a view on the stock markets," Warren Buffett said at the start of the news conference held in advance of tomorrow's

Berkshire Hathaway

(BRKA)

'99 annual meeting. As he progressed, Berkshire's chairman opened up a bit: "These valuations could continue for many years, they could become even higher by our standards."

With Berkshire Vice Chairman

Charlie Munger

at his side, Buffett says his company finds very few opportunities in the public markets. "We do find very, very few things to buy." (Munger seemed to agree, suggesting Berkshire is in no hurry to jump. "We can be amazingly patient if we need to be.")

Goldman, Schmoldman

Buffett said he hadn't given much thought to IPOs. "We've never bought an IPO," he said. "Well, maybe one -- but none in the last 30 years."

That said, he's not excited about the

Goldman Sachs

IPO. "An IPO is sold when the seller wants to sell it." To Buffett, that doesn't leave much for the buyers.

However, he does think Goldman's decision to postpone the IPO last fall was a great buy signal for brokerage companies.

"You might have concluded that when Goldman called off its IPO, it'd be a good time to buy," he said, adding that if you'd bought many of the brokerage firms on the news you would have already doubled your money.

Buffett's REIT Adventure

When Buffett was asked about recent filings that suggested he had a stake in a trio of real estate investment trusts, he acknowledged the move. However, he also disputed reports that Berkshire has a position in

Omega Healthcare

(OHI) - Get Report

. "I'd never heard of Omega until I read in the papers that I'd bought it," he said. While admitting it was possible that one of the subsidiaries of

General Re

, a recent Berkshire acquisition, may have a stake in the company, he said he hadn't checked.

Buffett did acknowledge his interest in

Tanger Factory Outlets

(SKT) - Get Report

,

Town & Country

(TCT)

, and

MGI Properties

(MGI) - Get Report

. However, as

reported here before, he suggested the moves represented a small personal investment, intended more for income generation than to build equity. "I have almost 99.75% of my net worth in Berkshire, so anything I do outside of Berkshire is insignificant," he said. "I try to invest in a way so I don't need a salary from Berkshire in order to go to

Dairy Queen

regularly."

Still, Munger believes REITs were cheap when Buffett was buying. "It was clear that some of the REITs got way down below what they were worth to a private owner for a while," he said. However, Munger hinted that REITs may now be fairly valued. "That

did

happen," he added.

Looking Abroad

Buffett commented on several international markets, with significant time devoted to both Britain and Japan.

Recent reports suggest that Buffett has an interest in British markets. He says that's true, but that the interest is not terribly significant. "I would say that prices tend to look a little more reasonable

in the U.K. than they do here," Buffett said. "But I don't think it's a dramatic difference.

As for specific companies in the U.K., Buffett wouldn't comment. "I've been asked if the stock has a name.

It doesn't have a name. It's not that significant." Munger chimed in: "It's a nonevent."

Buffett seemed more upbeat on Japan. He said Berkshire had been close to a significant purchase there but that another investor moved first. "We were ready to move ahead," he said. "If another opportunity comes along, we'd look."

Overall, his tone was optimistic. "I think there may be some opportunities there, and they may be big -- which is even more attractive."

Carats and Carrots

Before the news conference, shareholders were seen dropping shares at

Borsheim's

today like there was no tomorrow.

America's largest independent jewelry store -- which is also a Berkshire subsidiary -- is open only one Sunday each year, and only for shareholders. It appears to be worth it. According to marketing coordinator Kevin Lawden, business was brisk and appeared to be ahead of last year's pace. While not disclosing sales figures, the company said Borsheim's wrote a sales ticket every 12 seconds last year.

Buffett does more than take at these three-day meetings for his followers; he caters to the physical needs of shareholders with a lavish buffet complete with carved prime rib, fresh fruit and cheese, baby carrots and an assortment of other elegant foods and wine. It's all complemented by (surprise!) an assortment of products from

Coca-Cola

(KO) - Get Report

, a major holding of Berkshire.

And, the offerings didn't stop there. Need auto insurance? Visit the

Geico

booth for a coverage quote. For visitors needing to learn more about Nebraska,

World Book

was ready to lend a hand. (Both are subsidiaries of Berkshire.)

In all, nearly 10,000 shareholders are said to have made it through the doors of the Regency shopping plaza today, and as many as 60% of those are said to have made purchases at Borsheim's. No wonder Buffett is always in such a good mood at Monday's annual meeting.

Tomorrow: More on Buffett's news conference and complete coverage of Berkshire's annual meeting.

Want to know what the Oracle of Omaha thinks? Join Contributing Editor

Christopher Edmonds

and longtime Buffett watcher

Robert Hagstrom Jr.

, manager of the

Legg Mason Focus Trust

and author of the new book,

The Warren Buffett Portfolio

, as they chat about Buffett's market outlook, his investment strategy and news from the Berkshire Hathaway annual meeting. It's as close as you'll come to getting inside the mind of one of the world's most famed investors. Chat with Chris and Robert on Yahoo! Tuesday, May 4, at 5 p.m. EDT. Register for the chat at

http://chat.yahoo.com. It's free!

How long can Buffett continue to deliver market-beating performance to his legions of fans?

He's history! BRKA has trailed the S&P by 9 percentage points over the past 12 months.

Buffett will rule again! -- as soon as this market returns to its senses.

Nobody -- even Buffett -- can outperform the market over the long haul.

I asked myself the same question when BRKA was at 400!

Christopher S. Edmonds is president of Resource Dynamics, a private financial consulting firm based in Atlanta. At time of publication, neither Edmonds nor his firm held any position in the stocks mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he welcomes your feedback at

invest@cjnetworks.com.