Normally, an investor with an estimated $52bn fortune would not be a natural recipient of Christmas compassion. But this is the season to pity Warren Buffett, says the FT’s Franceso Guerrera in Friday’s Short View column.
With a slowing economy, a moribund credit market and more companies looking for cash, a value investor of Mr Buffett’s calibre ought to feel like a kid in a candy shop.
After spending recent boom years in Omaha in a largely fruitless quest for cheap investments, he has repeatedly claimed to be ready to pounce with a big acquisition. And this might be just the time.
But just when Mr Buffett was limbering up to take advantage of the worsening climate, out come sovereign wealth funds to steal his thunder. Wednesday’s decision by China Investment Corporation to inject $5bn of foreign exchange reserves into Morgan Stanley brings the total invested by state entities in cash-seeking western groups to more than $70bn.
[And if, as the Wall Street Journal reported Friday, Temasek, one of the Singaporean government's investment arms, takes a $5bn stake in Merrill Lynch in a deal now under discussion, that figure will rise to $75bn.]
Nobody knows whether the Sage would have bought any of the stakes purchased by SWFs. But 20 years ago, Salomon Brothers turned to Mr Buffett when it needed help. Twenty days ago, the white knight role for Citigroup, Salomon’s heir, fell to an Abu Dhabi fund which parted with $7.5bn without even securing as much as a board seat in return.
That is one of the reasons corporate chiefs love sovereign funds. Unlike Mr Buffett, a stickler for corporate governance, they offer the prospect of receiving cash without giving up any power.
Mr Buffett’s investment savvy virtually guarantees he will find good opportunities away from the madding SWF crowd. But both he and the investors who follow his every move could be forgiven for not sending too many “Happy Holiday” cards to China and the Middle East this year.