15th February 2013
It may not be the only investing style but to buy strong, well run companies with secure market positions and then to hold them for a very long time has proved to be a pretty successful one.
It is certainly such a style that has benefited Warren Buffett over the years as he has turned many of his original Berkshire Hathaway investors into millionaires for a very small original outlay.
Now he has bought Heinz something that is no surprise at all, because it is very much his style of company. The surprise is that he has partnered up with private equity firm Brazil’s 3G Capital.
Buffett has been on the record saying he hates private equity as CNN reports today.
There are arguments to say that 3G Capital which is actually a combination of private equity and hedge fund house has a longer time horizon that your run-of-the-mill private equity house and CNN Dan Primack runs through the arguments in his piece and he sees a lot of expected private equity style behaviour.
The deal looks set to involve quite a lot of extra debt loaded on to Heinz. That doesn’t sound to much like the previous Buffett way.
If you are that sort of buy and hold investor, you now can’t buy and hold Heinz. You can buy Berkshire Hathaway, but that isn’t quite the same thing. Given his track record, you may very well make money, but ironically in doing so, it is also arguable that you won’t be investing in the classic Warren Buffett mould any more.