These companies do not have vocation to be resold

What would the world of finance without readily Kinky aphorisms of Warren Buffett Something like the moral daily without the "Fables" of La Fontaine and Coluche jokes. In the current atmosphere of earthquake on Wall Street, it is an essential way to distance. Thus, when it refers to investments which prove disastrous after the fact, he immediately convened old country singer Bobby Blare, who sings: "I am never put me in bed with an ugly woman, but I sometimes woke up with some."

And at this moment, painful Awakenings abound on the banks of Manhattan. As Buffett in his last letter to shareholders of his Berkshire Hathaway Corporation: "when the sea withdrew we see those who swam all nude... and the spectacle of our major financial institutions is not beautiful to see!

Despite this horror vision, this is the kind of atmosphere that appeals to the most famous investor in the world, which ensures that each stock market crash he feels "like a sexual in a harem obsession." 1973, 1979, 1990, 2002, each of the major crises of the last thirty years has been the opportunity for him to expand his empire.

Rapid movement observed last week on the electricity producer Constellation, the nose and beard of EDF, belongs to these strategic movements that he likes. A sector which pleases, energy, a company that he observed for a long time and finally the spark of a collapse of stock market of its target. Then grand-father Warren out of his den of Omaha, the city of the high plains of Nebraska that houses the modest headquarters of Berkshire Hathaway. With his large glasses, Brushy eyebrows and his good jokes, he inspired so much more confidence than these wolves of Wall Street or the "private equity". But do not rely on appearances. The only thing that distinguishes it from other wolves, in addition to his good mood, it is especially his patience. For the rest, he currently offered its shareholders an incredible performance to more than 20 per year on forty-two years of its existence. A record that would match all pirates of Wall Street.

Party in 1965 a small New England cotton spinning, Berkshire Hathaway is more than an investment fund. It is a giant group which includes three distinct and complementary activities. Insurance and reinsurance first companies, who bring a big piggy bank full of money of the insured to invest (nearly $ 60 billion). A second, more industrial activity with companies employing nearly 230,000 people in traditional sectors and long term as the brick carpets, jewellery, railway wagons or confectionery, for the recurrence of revenues. These companies do not have vocation to be resold. Third pillar, finally, the system Buffett, a more opportunistic and liquid financial products investment and activity of the shares of listed companies.

Today, its strategy is clearly to focus on the acquisition of companies in all. Because in good investor, who has always carefully saved and placed his savings at the age of ten years (at the time he bought cans of Coca wholesale and reselling them at retail), Warren Buffett does reasoning not in industry but in capitalist. The only data that really interests him is not sales or even the benefit, but the profitability of capital that he committed. Or that of its portfolio in the stock market, which includes securities as defensive (Coca - Cola, Procter & Gamble, Wells Fargo, Sanofi...), tends to decrease and still is expected to decline with the poor stock market.

Conversely, the "industrial" activity, akin to the "private equity" (off market), improves profitability over long period. Berkshire Hathaway turns therefore gradually into a huge conglomerate of a new genus, with autonomous subsidiaries but under supervision and a headquarters reduced to its simplest expression, since it uses less than 20 people!

Where the very careful care in the selection of candidates for the redemption, which in these times troubled pressing at the door of the modest offices of Berkshire Hathaway. The four criteria have not changed since the original: a trade that is easy to understand, stable performance over time, a competent and honest management, and finally a good price. More essential in the spirit of the founder who likes to draw in the mediaeval metaphors: from thick moat to protect the castle of the attackers, in other words the competitors. These flukes can be an exceptional brand, as Coca or Gillette, which allows them to do the Act or unbeatable prices, as his favourite company, the automobile insurer Geico.

For him, this is clearly the strategic positioning and the intrinsic quality of the business making its value more than the management. Was "Invest in a case that even a fool could lead, because someday a fool will be," custom to say.

For the rest, Warren Buffett bothering not management, but on the other hand it monitors such as milk on fire use money earned by the companies. His theory, who joined that of many investors is that bosses tend naturally to want to expand their empire through costly investments and acquisitions rarely effective, rather than return the money to shareholders. For him, except, only internal growth is profitable. Therefore cutting the wings of the CEO to limit their ambitions.

It is with these simple and unchanging principles that Warren Buffett is gone on the warpath. Already very invested in his company MidAmerican Energy, he just counter EDF with over $ 4 billion on the table to buy Constellation. A business as it likes: predictable in the long term. Because, at seventy-seven years, the man from Nebraska, who works hand in hand with his partner Charlie Munger, eighty-four years, imagine always has eternity before him. And regardless of him that a good part of his portfolio contains financial or values related to the construction market, its recipe has survived both disasters. As Omaha, this city without soul and infinite horizons. A crossroads of all the businesses founded by speculators in 1854, city regularly destroyed by tornadoes, always rebuilt.