“POSCO Is the Cream of the Crop. I Love Korean Companies”

“When I first came to know of POSCO, I thought, ‘Why haven’t we been aware of this wonderful company before?’ We love Korean companies,” said Warren Buffett, CEO of Berkshire Hathaway.

In a press conference held on May 6 (local time) at the Omaha Marriott Hotel, Nebraska, Buffet and Vice Chairman Charlie Munger praised Korea. Buffet said in addition to the POSCO shares that Berkshire invested in, Munger and himself have personally bought Korean stocks and are now trading them a lot.

He said, “After reviewing a report (on Korean companies), prepared by Citigroup, I bought shares of 20 companies that showed good performances and had low share prices even though I had never heard of them. I was confident that even if a few of them didn’t do well, the overall result wouldn’t be bad.”

Asked about the newly concluded KORUS FTA, he said, “It won’t affect investment decisions for individual companies like POSCO, or Samsung.”

When also asked, “What’s your response to the suggestion that the Korean Stock market doesn’t allow Buffett-style value investment?” Buffett answered, “I invested in Korea the way I did in the U.S. and I succeeded.” He then asked a question in return, “Are we going to have non-value investing then? I`ve never understood what the alternative is.”

Regarding the dispute about the inheritance tax that is still ongoing in the U.S., he said, “We don’t send children of former athletes who participated in the Olympics 20 years ago to go to the 2008 Olympics without considering their abilities. What is more important is providing people with equal opportunities.”

He also voiced his concerns over rapidly rising worldwide liquidity. He warned, “People have now all lowered their guard. When speed decreases to 25 mile per hour (about 40 km per hour), people think they are safe and are not willing to fasten their seat belts. But they are not safe at all. The market is no different. Liquidity can rapidly increase at any time.”

Asked what was the secret of his good health despite drinking Coke everyday, after taking a swig of cherry flavor coke as usual, he mentioned he didn’t smoke and get stressed, and said, “Because I am living surrounded by people I like and those who like me.”

In regard to the question, “Does a new CEO have to stay in Omaha where Berkshire Hathaway is headquartered?” He answered, “The person should live wherever he or she thinks best,” and said, “If candidates are picked, I am going to give them a trial period where they will manage 3 or 5 billion worth dollars of investment capital.”

kong@donga.com