Idle Chatter Regarding Recent Forbes Article On Warren Buffett

Updates

August 17, 2012: I posted the original post earlier this week. Now, on Friday, this "Daily Ticker" story: gasoline prices will continue to rise until US builds more refineries. We all know that ain't gonna happen. My hunch is that Warren knows that also. See original post.

 

Original Post

This is simply idle chatter. It was a reply I sent in e-mail in response to an article in Forbes on-line. It is nothing more, nothing less; it may not be ready for prime time, but I'll throw it out there for archival purposes. It has to do with the article in Forbes with regard to what is Warren Buffett doing with all that cash on hand?

Here's my reply:

I've always like Sosnoff in Forbes. I posted a link to one of his great oil articles over a year ago:

http://www.milliondollarwayblog.com/2011/01/for-investors-great-3-page-article-on.html

Sosnoff is one of the reasons I hated giving up my subscription to Forbes. But too much free stuff and I'm on the road a lot, missing my mail. I don't like to subscribe to magazines on the net.
 
With regard to Buffett and his cash:
 
1) I would really wonder about the regulators if they let him buy another railroad, especially Union Pacific, about the only true competitor of BNI. It would be a win-win for me. After he bought BNI (I kept the BKR-B stock) I started accumulating Union Pacific.
 
2) I think Warren Buffett is old school. He likes to keep cash on hand; he can sleep better at night. 
 
3) Buffett's biggest asset is that he doesn't worry about quarterly reports (or so he says); I don't think he even thinks in yearly increments; he has a longer term horizon. He may not "buy and hold" forever, but he certainly does "buy and hold" for a long time.
 
4) He missed technology (Apple, Google, Amazon). But he could have gotten sucked into RIMM, Facebook, Groupon if he had played momentum. If, in technology his only fault is not buying Apple, he more than made up for it by not buying Nokia, Sprint, RIMM, Facebook, and a host of others. I will give him a pass on Apple.

5) Back to your original question: what is Warren doing or going to do? I think he is looking at oil service companies. Outside of oil service companies, possibly refineries. Refineries have never been a winner long term, but one has to really look at what Tesoro is doing. "Everyone" is getting out of the refinery business except Tesoro, it seems. Not necessarily getting out, but spinning off, downsizing, selling, etc. Tesoro is buying BP in a crunch from what I can see. My hunch is he has a group of MBA's looking very, very hard at the energy picture knowing the demographics and energy needs of China. 

6) Warren, living in Omaha, Nebraska, must be inundated with news stories on the Mississippi Lime, assuming he reads the local news any more. He has to have seen that no matter how hard Obama stomped on the oil and gas industry, it was about the only industry that thrived; imagine what the industry could do with a little "cheerleader" support from the government.

Anyway, my 2 cents -- maybe I will post that.