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Buffet Invests in Australia

Discussion in 'Other Asset Classes' started by keithj, 19th Jun, 2015.

  1. keithj

    keithj Moderator Staff Member

    14th Jun, 2015
    Blue Mtns
    Buffet has dipped his toe in the Australian Stock Market - he invested a small amount in IAG (formerly NRMA). And he says it is likely he will have made more investments here within 3 years.

    The exchange rate means that the ASX currently looks relatively cheap compared to the rest of the world.

    Is it likely that there will be interest from other big investors in the Australian stock market in the short/medium term ?
  2. The Falcon

    The Falcon Well-Known Member

    18th Jun, 2015
    Ok my thoughts on this quickly;

    This is not an investment in IAG because its a great business at an attractive price. Berkshire will give IAG cheap reinsurance, and in return get 20% of IAG's gross written premiums. This is an "operating business with synergy" investment rather than a stock investment.

    Berkshire's subsequent investments in Australian listed equities will be investing its AUD float from such operations, in matched currency (ie. AUD - AUD). This is not a raging vote of confidence in the Australian market (that the press claims it to be) but just matching float currency against potential liabilities (claims) in the same currency. In addition to whatever BRK buys, they will like also buy Australian Govt. Bonds, and or corporate bonds too.
    pommy, KDP, Redwing and 1 other person like this.