Anchor Liz ClamanÃ¢â‚¬â„¢s FOX Business Network exclusive interview with legendary investor Warren Buffett will air as an hour-long special on FBN this weekend. Viewers can catch the news-making interview on Saturday, 10/20 at 8:00 PM/EST and 12:00 AM/EST, and Sunday, 10/21 at 6:00 PM/EST and 11:00 PM/EST.
Wall Street analysts were buzzing about BuffettÃ¢â‚¬â„¢s comments on the Brazil real, why he sold his stake in PetroChina, and his belief that homebuilders havenÃ¢â‚¬â„¢t hit the bottom yetÃ¢â‚¬Â¦but the FBN interview also made waves at CNBC, which was running headlines from the interview on Closing Bell.
CNBC did credit FBN in its lower thirds for this unprecedented hour-long interview with one of its former anchors.
Fox Business had an interview with Warren Buffet. Whatever Buffet says I take as scripture. If he thinks things are OK, so do I. Here are some of the highlights courtesy of Fox. If you would like a full transcript of the entire hour please email me and I will send it to you.
WARREN BUFFETT, CEO & CHAIRMAN, BERKSHIRE HATHAWAY, INC. TELLS FOX BUSINESS NETWORK THAT HOME BUILDERS ARE NOT UNDER VALUED
In a broadcast exclusive with FOX Business NetworkÃ¢â‚¬â„¢s Liz Claman, Warren Buffett talks about the housing market, selling his stake in PetroChina, the mystery currency he never announced until now and his own investments. Below are the excerpts. The full transcript is available upon request.
* Mandatory credit: FOX Business Network
On taking stakes in home builders:
Ã¢â‚¬Å“I didnÃ¢â‚¬â„¢t buy a share. I look at them. I look at their debt, their equities. I look at everything. IÃ¢â‚¬â„¢m waiting until theyÃ¢â‚¬â„¢re under priced. ThatÃ¢â‚¬â„¢s what I look for with any security. And, I donÃ¢â‚¬â„¢t think theyÃ¢â‚¬â„¢re undervalued. Starting 30 minutes, ending 18 months ago Ã¢â‚¬â€œ that year Ã¢â‚¬â€œ we probably had more home builders offer to Berkshire where the managements wanted to see the business that IÃ¢â‚¬â„¢ve ever seen in any industry. A significant percentage of the publicly-owned home builders, when their stock was flying high and their management was talking bullishly, were trying to sell their companies. Apparently they knew what was going on or likely to go on. Though, I donÃ¢â‚¬â„¢t think they saw it coming as extensively as it did.Ã¢â‚¬Â
On the TreasuryÃ¢â‚¬â„¢s bailout fund:
Ã¢â‚¬Å“Well, right now, itÃ¢â‚¬â„¢s a mystery fund. When they announced it Monday they said more details would come. I havenÃ¢â‚¬â„¢t seen any details so I donÃ¢â‚¬â„¢t really know what theyÃ¢â‚¬â„¢re talking about. I donÃ¢â‚¬â„¢t see anyway that pooling a bunch of mortgages, changing ownership is going to change the viability of the mortgage instrument itself. IÃ¢â‚¬â„¢m withholding judgment on it and a little skeptical until I see the details.Ã¢â‚¬Â
Ã¢â‚¬Å“Would a fund like that help anyone pay their mortgage or save them from foreclosure?
No. Not that I see. In the end, you need to have enough money to make the monthly payments. And, particularly, if youÃ¢â‚¬â„¢ve had the teaser rate with the monthly payments increasing, there are a lot of problems out there with that.Ã¢â‚¬Â
On banks keeping this information off balance sheets:
Ã¢â‚¬Å“They didnÃ¢â‚¬â„¢t want to incur the capital requirements they would have by keeping them on the balance sheets. They stuck them in the vehicles that they still get the earnings benefits from but they didnÃ¢â‚¬â„¢t have the capital requirements. I think it would have been better to have them on the balance sheet so everyone knew what was going on.Ã¢â‚¬Â
On picking up Countrywide shares:
Ã¢â‚¬Å“Well, I talked to Angelo Mozilo, CEO, a few times and I never came close to buying the stock. If there had been a comprehensive plan that might have involved us in some way owning some security I would have listened to the idea. But, Bank of America came along and bought a $2bn convertible preferred as you know so we didnÃ¢â‚¬â„¢t get close to doing anything.Ã¢â‚¬Â
Ã¢â‚¬Å“They ran into some problems that other big investment banks and commercial banks have. As they say, when the tide goes out you find out whoÃ¢â‚¬â„¢s been swimming naked. And, now the tide is going out.Ã¢â‚¬Â
On Angelo Mozilo:
Ã¢â‚¬Å“Angelo was one of the first ones to say, with respect to what was happening in the mortgage market, he said IÃ¢â‚¬â„¢ve never seen a soft landing and this is when we were talking about a soft landing. So, he put out a few warning signals and maybe his sales, themselves, were warning signals. In the end, I think he finally saw what was coming but he did describe it fairly well publicly a few times.Ã¢â‚¬Â
Ã¢â‚¬Å“We sold it [all stakes], but we sold it based on price [not politics]. At the time of the annual meeting it was around $100 and since then it has more than doubled so, unfortunately, I sold it a little too soon. It was a decision based 100% on valuation.Ã¢â‚¬Â
Ã¢â‚¬Å“If it went down a lot IÃ¢â‚¬â„¢d buy it back.Ã¢â‚¬Â
Ã¢â‚¬Å“We made about $3.5bn on a $500m investment but we still sold it too soon. I left a lot of money on the table.Ã¢â‚¬Â
On how he found PetroChina:
Ã¢â‚¬Å“I sit there in my office and read an annual report, which fortunately, was in English, and it described a very good company. It told about the oil reserves, the refineries and everything else and I sat there and read it and said to myself this companyÃ¢â‚¬â„¢s worth about $100bn. I donÃ¢â‚¬â„¢t look at the price first. I look at the business first and try to figure out what itÃ¢â‚¬â„¢s worth because if I look at the price first IÃ¢â‚¬â„¢ll get influenced by that.Ã¢â‚¬Â
On whether heÃ¢â‚¬â„¢s looking at other companies in China:
Ã¢â‚¬Å“The answer is pretty much no. I donÃ¢â‚¬â„¢t look based on companies or that sort of thing. I just read every report I can and figure out whether something is cheap.Ã¢â‚¬Â
On the mystery currency he alluded to last year:
IÃ¢â‚¬â„¢ve decided that rather following this idea of currencies, I would buy businesses with lots of earnings abroad because thatÃ¢â‚¬â„¢s a better way, in my view, to play a bearishness on the dollar. I had this one position and itÃ¢â‚¬â„¢s kind of an interesting position because itÃ¢â‚¬â„¢s quite unlikely that if you had told me ten years ago that I would buy the Brazilian Real, I would have you thought you were crazy. But, Brazil in the last century has had five different currencies that went basically to zero. I mean, they turned into confetti. In the last five years, the Brazilian currency, in terms off the American currency, has doubled in value.Ã¢â‚¬Â
On the American economy:
Ã¢â‚¬Å“ItÃ¢â‚¬â„¢s better than I would have anticipated with crude oil being close to $90 and all the grains moving up, with house depreciation actually setting in. WeÃ¢â‚¬â„¢re seeing slowdown some places. In retail weÃ¢â‚¬â„¢re seeing a slowdown. WeÃ¢â‚¬â„¢ve got a number of businesses that are related to construction and weÃ¢â‚¬â„¢ve seen a big slowdown there. But, so far, unemployment hasnÃ¢â‚¬â„¢t taken off at all.Ã¢â‚¬Â
On whether slowdowns will translate to recession:
Ã¢â‚¬Å“ItÃ¢â‚¬â„¢s hard to tell. When the American public is getting squeezed by higher transportation costs, food costs and house depreciation when formerly they could keep taking money out and refinancing, it could lead to that, sure.Ã¢â‚¬Â
On the Fed cutting interest rates:
Ã¢â‚¬Å“My guess is more than the job figure went into their calculation. They were seeing what was going on in the mortgage market. But, we donÃ¢â‚¬â„¢t really worry about Fed policy or recession. I hope I live to see a couple of recessions. In the next 20/30 years thereÃ¢â‚¬â„¢s going to be a recession every now and then, but, overall, weÃ¢â‚¬â„¢re going to do fine.Ã¢â‚¬Â
On whether any of his divisions are suffering right now:
Ã¢â‚¬Å“Our brick business is down very significantly. ThatÃ¢â‚¬â„¢s in the southwest primarily. Char carpet. A lot of that goes into new construction. The carpet business is down for us and our competitors. Insulation for homes is down though not for commercial buildings. Anything related to construction is going to be down.Ã¢â‚¬Â
On what is doing well:
Ã¢â‚¬Å“WeÃ¢â‚¬â„¢ve been really lucky on insurance this year. Insurance is far bigger than anything else for Berkshire so when weÃ¢â‚¬â„¢re lucky in that it takes care of everything else.Ã¢â‚¬Â
On finding companies to invest in:
Ã¢â‚¬Å“Some guys read Playboy. I read annual reports.Ã¢â‚¬Â
On why he never bought an Internet company:
Ã¢â‚¬Å“The truth is that I donÃ¢â‚¬â„¢t understand what theyÃ¢â‚¬â„¢re going to look like in 5 or 10 years from now. I donÃ¢â‚¬â„¢t know how to make money in cocoa beans and I donÃ¢â‚¬â„¢t know how to make money in predicting what Internet companies will win ten years from now.Ã¢â‚¬Â
On how much money he spent buying stocks yesterday:
A little over $200m. About four different companies.
UPDATE: I won’t be able to send the full transcript out until tonight. I have received 40-50 emails and I am away from the computer I stored it on. I will send one to everyone who asks as soon as I get home.