2014: Why hasn't Berkshire made more foreign investments?
GREGG WARREN: Thank you, Warren.
You’ve been pretty explicit about your acquisition criteria over the years, and some years ago, perhaps around the time of the ISCAR deal, you mentioned at one of the annual meetings that a concerted effort was being made to make non-U.S. companies more aware of Berkshire’s positive attributes as a preferred acquirer.
Yet, despite the higher proportion of large family-owned businesses in places like Europe and the fact that over half of the world’s listed market cap currently comes from outside of the U.S., Berkshire has deployed very little capital outside of the U.S. with just ISCAR, and more recently AltaLink, coming to mind.
Is the U.S. truly that much more attractive a destination for capital, or is there some other reason why the firm has not deployed serious capital outside of the region?
WARREN BUFFETT: Yeah, no, we’ve never turned down a chance to make a significant acquisition outside the United States because of any feeling we’d much rather be doing something in the United States. We just — you know, you mentioned the Alberta deal.
But we have not had as much luck getting on the radar screen of owners around the world as we have in the United States.
Our best bet, by far, in buying a business is to buy it from the family of a founder or the founder himself or herself. So we’ve, you know, that’s our strong suit, and in the United States I think almost anybody that fits in that category with a business of size thinks of us. And a fair number would prefer us.
I don’t think that same — I think there’s some recognition outside the U.S. Certainly when we heard from ISCAR, that was in 2006, Eitan Wertheimer said, he wrote me a letter, I’d never heard of him before, I’d never heard of the company. And he said the family had thought about it, and we were the only company to which they wanted to sell, and if they didn’t sell it to us, they weren’t going to sell it.
So, there’s some awareness. But I’ve been a little disappointed in that we haven’t had better luck outside the country. And we’ll keep working at it and see what happens.
Incidentally, I just talked to Jacob Harpaz, who does an incredible job of running ISCAR. I talked to him yesterday when I was touring the exhibition hall.
They set a new record in April. Now, that won’t be the last new record they set. But that may have some slight meaning, in terms of how world business is doing, because they sell, you know, these tiny little cutting tools, and so on, that go into basic industry all over the world.
And people don’t buy those because they — you know, they’re going look pretty in their offices or anything else, they buy them because they’re using them up. And, it was a record in April. March had been extremely good, too. So they are seeing strength in the business that certainly would make it hard to believe there’s weakness going on throughout the industrial world.
ISCAR’s been a wonderful company for us. The people have been sensational. The business is extraordinary. It just is — it fits us so well that I just wish I could find a few more like it out there.
But this year, aside from the one we announced yesterday, we have not been contacted by any significant ones that made sense. We have heard from people over the last five years, I mean, we’ve — fair number. But nothing that really makes sense. But we’ll keep trying.