Buffett’s circle of competence

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After the weekend release of Berkshire Hathaway’s 2013 results and the letter from Chairman Warren Buffett, a few sceptics might be quietly wondering whether Buffett might have lost his Midas touch.

Over the last five years, Berkshire has lagged the S&P 500 index – notably in 2013 when the index soared 32.4% and Berkshire’s book value per share rose only 18.2 % - making it four years out of five of under-performance.

Looking for acquisitions

But the Oracle of Omaha reassures shareholders that he still thinks the company can outperform in years when the market is down, or only moderately up. And, while it always is hard for such a heavyweight investor to add value from new acquisitions, Buffett and his partner Charlie Munger are still looking for large “elephant” deals similar to the $US18 billion spent last year buying a majority of HJ Heinz and NV Energy.

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