Legendary investors Warren Buffett and George Soros are snapping up shares of companies at prices they perceive to be bargains. From The Hindu Business Line (India) earlier today:

In the midst of people selling their stocks as market values touch the nadir, legendary investors - Warren Buffett and George Soros - seem to be swimming against the tide and shopping for stakes in companies worldwide.

With the economic crisis ravaging global markets, the two billionaires are making investments in firms from America to Australia, which are expected to yield long term benefits.

The Indian publication detailed recent purchases by the two investing legends. From the piece:

The legendary investor [Buffett] had pumped in $5 billion to battered Wall Street giant Goldman Sachs and another $3 billion into diversified conglomerate General Electric.

According to reports, Soros snapped up a five per cent stake in Australian firm Sphere Investments. The company is reportedly looking to develop a multi-billion dollar iron ore mine in Mauritania. Moreover, in October, Soros had acquired over five percent in Australian mining firm Legend International.

The deal is pegged to be worth more than $8 million.

NEW VIDEO: Where is the bottom in Crude?

Yesterday, the Washington Business Journal’s Jeff Clabaugh wrote in the New Mexico Business Weekly about an acquisition by the “Oracle of Omaha.” According to his article:

CORT, an office furniture and corporate relocation services company acquired by Warren Buffett’s Berkshire Hathaway eight years ago, has acquired Aaron Rents Corporate Furnishings for $72 million.

CORT says the acquisition makes it the only national furniture rental company, with locations in more than 70 metropolitan areas. Aaron Rents operates rent-to-own furniture rental stores. Both companies have locations in Albuquerque.

Think the chairman and CEO of Berkshire Hathaway anticipates tough times ahead for American and British consumers? Clabaugh noted:

In January, Berkshire Hathaway (NYSE: BRK/A) acquired Roomservice Group, a furniture rental company in the U.K.

Sources:

“Buffett, Soros continue buying stake in cos”
The Hindu Business Line (India), November 7, 2008

“CORT acquires Aaron Rents division”
Jeff Clabaugh
New Mexico Business Weekly, November 6, 2008

Here are the latest plays by legendary investors Warren Buffett, Jeremy Grantham, Mark Mobius, and Jim Rogers:

Warren Buffett

Equities:

(GurusFocus.com, October 13)

Warren Buffett has been one of the most notable buyers. After cutting an amazing deal with Goldman Sachs and watching shares of Berkshire Hathaway (NYSE:BRK-A) fall about 30% in the last month, he’s making plenty of other moves. Berkshire was perfectly positioned as it entered September with a $40 billion cash.

The bid to take over Constellation Energy Group (CEG) still stands. Berkshire has also agreed to put $3 billion into 10% preferred shares of General Electric (GE). Also, $6.5 of Berkshire’s dollars were committed as part of the Wrigley (WWY) LBO led by Mars.

His latest move is probably the timeliest. In order to capitalize on the Bull Market in Volatility, Berkshire is starting to write put options more aggressively. This week Berkshire disclosed it has written put options on Burlington Northern Sante Fe (BNI).

Berkshire sold put options that will force it to purchase 1.95 million BNI shares between $77 and $80 per share. The contracts were sold for a total value of $12.76 million and will just defray the costs of buying more BNI…which they were probably going to buy anyway. Berkshire also sold put options for 1.3 million shares of BNI earlier in the week.

Jeremy Grantham

Equities:

(Barron’s, Lawrence C. Strauss, October 13)

(Grantham speaking) In a nutshell, we are as conservative as we can possibly get. One bet that has been very successful for us, touch wood, has been long high-quality, blue-chip stocks, particularly in the U.S., and short risky companies. We have been screaming against risk-taking for a long time, and in recent weeks, it has paid off enormously…

Going forward, you can think about slowly moving back into the cheapest pockets of global equities. So the next move that we make will be back to moderate neutral in emerging-market equities and small-cap international value. I can’t say we are going to be in a great hurry, but that will be our next move. We had finished selling almost everything except emerging markets two years ago. We finished selling emerging market equities three months ago.

But the next move will be buying, and we are encouraged that there are a few pockets that are cheap on an absolute basis. We are not encouraged that they will rally immediately. But we will be looking to buy the cheap pockets of global equities as our next move some time in the next several months.

(Morningstar.com, Russel Kinnel, October 14)

Nonetheless he’s now more constructive about equities because he believes they are trading at severely depressed prices. He said that at the end of Friday, global equities were trading as cheaply as they had been since the 1980s. In fact, the U.S. had traded below GMO’s fair value estimate–though as we spoke Monday morning a rally had brought it back to around fair value. Specifically, he prefers blue chips to small caps or highly leveraged companies.

“We’re buying carefully and slowly,” Grantham notes. Why slowly? “When bubbles correct, they usually overcorrect so that the market is selling well below fair value.”

Interestingly Grantham also says he’s now neutral on financials–a sector he has long disliked. He notes that most of the credit crisis is likely behind us and that the newest plan of worldwide governments to inject capital into banks in exchange for shares is a big improvement on past plans.

Commodities:

(Barron’s, Lawrence C. Strauss, October 13)

(Grantham speaking) Commodities have a great long-term future, now that the long-term trend has shifted from falling commodity prices to rising commodity prices. Having said that, the next couple of years will be quite different. We are in a global slowdown, which I think will be worse than expected even today, and it will be longer than expected — so this is not a healthy environment for commodities. Over a shorter horizon, I would be getting out of the way of commodities or I would be short commodities. I’m personally short oil; the firm is short copper.

(Morningstar.com, Russel Kinnel, October 14)

Grantham expects that slowing growth will also keep commodity prices falling. “I would keep out of commodities for the near term,” he said.

Currencies:

(Barron’s, Lawrence C. Strauss, October 13)

(Grantham speaking) I’m speaking for the asset-allocation unit at the firm. We have been substantially long the safe-haven currencies. We have been very long the yen and somewhat long the Swiss franc and short sterling, which is one of our favorite bets. We have been short the euro for three months, and slightly long the U.S. dollar. One of the paradoxes is, if the world is worse than people expect, the U.S. dollar will outperform.

Mark Mobius

Equities:

(Reuters, George Georgiopoulos, October 13)

“We are buying stocks with single-digit price-to-earnings ratios, price-to-book little more than one, dividend yields of around 5 percent. Tupras refiner in Turkey, for example, now has a dividend yield of around 20 percent,” Mobius said. Templeton’s favourite emerging markets include China, India, Russia, Turkey and South Africa. Its funds also invest in Greek companies that have a lot of their earnings in emerging markets, such as National Bank and Hellenic Bottling.

Jim Rogers

Bonds:

(Bloomberg, October 14, Wes Goodman, Anchalee Worrachate)

“The U.S. government is taking on gigantic amounts of debt,” Rogers said in an interview in Singapore, where he lives. “They’re printing gigantic amounts of money. Printing money has always led to more inflation. The last bubble in the world that I can find is long-term U.S. government bonds.”

Rogers said he is “shorting” 30-year debt, or betting prices will fall.

Sources:

“What The Smartest Money Is Doing Now”
GuruFocus.com, October 13, 2008

“Still Holding Back”
Lawrence C. Strauss
Barron’s, October 13, 2008

“Grantham: Stocks Haven’t Been This Cheap since 1987”
Russel Kinnel
Morningstar, October 14, 2008

“UPDATE 1-Mobius sees markets close to bottoming”
George Georgiopoulos
Reuters, October 13, 2008

“’Long Bond’ Favored as Investors See Waning Inflation (Update1)”
Wes Goodman, Anchalee Worrachate
Bloomberg, October 14, 2008

Jitendra Kumar Gupta from India’s Business Standard caught up with legendary investor Jim Rogers, who was in Mumbai for the launch of the Birla Sun Life Commodity Equities Fund. From the Standard’s website yesterday:

At the conference and in an interview with Jitendra Kumar Gupta, he shared his outlook on commodities and the world economy. Excerpts:

What is your view on global economy and inflation?
The world economy is in recession and the inflation is going to stay here, it is going to get worse. Some countries lie about it. But, inflation in all countries is going to get worse. The next decade is going to see lot more inflation, which is not good.

In this light, how can one beat inflation and generate higher inflation adjusted returns?
Commodities are the best inflation hedge, better than real estate better than anything else. Nothing can assure you better than commodities, but only if you are good at it. You have to pick the things that go up the most to make more money. Inflation does not cause prices to rise, price rise causes inflation.

Frequently, since the prices of the commodities go up before the inflation numbers, one can stay ahead of inflation. But, if you get it wrong you might do worse. So, investing in those commodities, which are going to go up first or selecting the right commodities, is the key to stay ahead of the inflation and make a lot of money…

Do you think Asian economies are decoupling from the rest of the world?
If you deal with the largest economy you are going to get affected by what is happening in America. If you are in the other sectors in Asia, such as water treatment and agriculture you have decoupled. You do not care what is happening in America.

But, if you sell to Wal-Mart, which is the largest retailer in America, you are going to suffer badly. So, some will decouple and some may not. Since India is such a closed economy, which is a negative as far as I am concerned, in this particular short term, India will suffer less probably than other countries which are more integrated with the world economy.

What is your view on the dollar?
Fundamentally, dollar is a terribly flawed currency. I am pessimistic about the future of the dollar; I expect it to continue to deteriorate over the next two or three decades.

The dollar is rallying at the movement because there are so many pessimists including me. But, I hope to use that rally some time in next year to get better of rest of my dollars. I do not want to own any US dollar. Also, I would not urge you to buy US dollar. Dollar is going to loose its status as world reserve currency.

Some of the OPEC countries have already started and no longer take dollar, like Venezuela no longer accepts dollar. Other countries, like Gulf, are already looking and may be taking a package of basket of currencies instead of dollar. I am not the only one who knows the dollar is in trouble. Anybody who watches the TV knows that the dollar is in trouble.

What is you assessment of the crude oil prices in the short and longer term?
I do not have idea as to where the oil prices are headed in the short to medium term. I do know over the course of the bull market, which perhaps has another 10 years to go, the crude oil price will be much higher.

Your bets in the commodity space?
Agriculture is one thing I will be looking for the next decade or so. Within commodities, I would not say these are the best, but may be sugar, coffee and cotton. I am also starting to look at some of the base metals they are down a lot; starting to look at some of these like silver, copper, zinc and gold.

Also, if you want to invest in Asia, commodities are the best way. Because, no matter what happens, the commodities have to be better, Asia has three billion people and is now involved in the world economy. Besides, in commodities you do not have to worry about corporate governance, central banks, unions, politicians or anything.

With gold prices correcting, do you still advocate buying gold?
I am trying and want to buy some gold. However, whether this is the low in the gold, I have no idea, but if gold goes lower, I will add some more. Gold is something I do not plan to sell. Gold is something I will gift to my children.

How will alternative fuels play?
Many politicians around the world are advocating bio fuel now. It is going to happen whether it is good or bad. There is going to be much more demand for the bio fuel going forward. This is also a reason that I am optimistic about the outlook of agriculture.

Your views on the water potential in Asia?
India and China have huge water problems. Water could be the next big investment. And, the best way is to invest in water companies which clean it, transport or pump it. Find the water companies that solve the water problem and you could be the richest person in India.

Source:

“’The US dollar is in trouble’”
Jitendra Kumar Gupta
Business Standard (India), September 15, 2008

Well-known commodities investor Jim Rogers is undeterred by the recent selloff in hard assets. Bloomberg’s Rattaphol Onsanit wrote this morning:

Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, said a tumble in commodities from records represented a temporary reverse in a long-term rally.

“I don’t see that it’s the end of the bull market,” the chairman of Rogers Holdings, said in an interview in Bangkok before speaking at an investor conference later today. “Until either a lot of supply comes on stream or the economy collapses, the bull market will continue,” he said.

The co-founder of the legendary Quantum Fund added:

“I am contemplating whether it’s time to get involved in base metals again,” Rogers, 65, said today. “I haven’t bought any for awhile.”

Onsanit pointed out other areas Rogers felt may have potential. He wrote:

Rogers, who moved to Singapore after selling his New York townhouse last year, said he was still optimistic about agricultural commodities and China’s economy, favoring the tourism, education, infrastructure, and power generation sectors.

Beijing Opera

George Iype of India’s CommodityOnline.com shed some more light on Jim Rogers’ latest investment outlook. Iype wrote earlier today:

The high oil prices and the pull back in some commodity prices on recession fears have not dampened Rogers’ enthusiasm for resources investments. “I am very bullish on metals and precious metals. Crude oil price will continue to rise, because there is a major demand-supply mismatch. Those who blame speculators for high oil prices do not know how the Futures market and oil market operate. Rogers is also upbeat on agricultural commodities. “I am bullish on opportunities in the agricultural commodities market. I am investing there now. The secular bull market in commodities will continue to go on now for some years,” he adds.

Sources:

“Jim Rogers Says Commodities Will Rebound After Drop (Update1)”
Rattaphol Onsanit
Bloomberg, August 21, 2008

“Why Jim Rogers is bullish on commodities”
George Iype
CommodityOnline (India), August 21, 2008

Legendary emerging markets investor Mark Mobius, who oversees about $40 billion in emerging-market equities as executive chairman of Templeton Asset Management Ltd. in Singapore, spoke to Bloomberg yesterday from Ho Chi Minh City. From the interview:

BLOOMBERG: Why the slide in emerging markets? Is it overdone?
MOBIUS: I think it is. The market has come down a lot. In fact, in China, in the Asia market, it’s come down far more than that. So, we’ve seen a very, very big correction in many places around the world in emerging markets. And it seems to be overdone, but not necessarily over, because, you know, the sentiment is bad globally so that there’s a tendency for people to sell out, and stay out, until they see an about-face in the market.

Some notable excerpts from the interview included:

Commodities

I think that the demand for these commodities is going to continue at a pretty high level. Of course, much higher than there has been in the past, simply because of the demands from China, India, and these other countries that are growing at the paces I just mentioned. So I think it’s more of a correction, rather than a significant secular downturn in these markets and the commodity markets.

U.S. Dollar

BLOOMBERG: Would you not be particularly bullish on the dollar as well?
MOBIUS: No, I wouldn’t, given the propensity of the U.S. government to spend the way they’re spending and to have new ventures against Russia in Eastern Europe, and so forth and so on. I think, unless these policies change in a new administration, I don’t see how the U.S. dollar can keep at a strong level.

Russia

We’ve been, and have been increasingly comfortable, with our investments in Russia. We’ve made an awful lot of money in Russia, both on the private equity side as well as the public side. And, things are getting better in Russia. I think the situation that we’re seeing with Georgia is an anomaly… I think that this will blow over and Russia will continue to be a very important place for us to be putting our money.

Brazil

Brazil, of course, is at the top of the list in terms of weighting in our funds at this time… But generally speaking, the banks are doing very well, very profitable. Petrobras, Vale do Rio Doce, extremely profitable companies.

India

The Indian market, finally for us value investors, has become more interesting, because of the downturn you just mentioned. So some of these companies are beginning to look quite attractive— some of the pharma companies, some of the software companies, and even some of the commodity companies, because you know India, has iron ore and produces a lot of steel. So, we’re looking at that more carefully, and we think they are good opportunities at this stage of the game. We were quite underweight in India for a long time because of the valuations.

Vietnam

The economy is thriving, and things are moving ahead… and we’re pretty optimistic about the longer-term future of the country.

You can listen to the 14 minute 26 second interview here.

Source:

Mark Mobius Interview
Bloomberg, August 20, 2008

According to the mining investment news site Mineweb, billionaire investor and philanthropist George Soros was significantly active in the mining sector last quarter. Mineweb’s Dorothy Kosich wrote earlier today:

Über investor George Soros stocked up on potash mining shares during the second quarter, increased his Freeport-McMoRan Copper & Gold holdings by more than 1,600%, invested in the world’s largest uranium miner, Cameco, and dumped his holdings in Apex Silver, CVRD and Southern Copper.

Documents filed with the SEC revealed that among the gold companies in which Soros Fund Management maintained its holdings during the second quarter were AngloGold Ashanti, Barrick, and Newmont.

Soros Fund increased its holdings in Potash Corp. of Saskatchewan Inc. by 2568%… The fund also enhanced its Freeport-McMoRan Copper & Gold holdings by 1608%…

Among the fund’s new purchases was Canadian uranium miner Cameco… as well as CONSOL Energy Inc., the largest U.S. producer of high-Btu bituminous coal… The fund also initiated holdings in Intrepid Potash, the largest U.S. potash producer…

The Soros Fund reduced to its holdings in IAMGOLD Corp. by 23.3%… Soros reduced to his holdings in Alpha Natural Resources Inc., a Central Appalachian coal producer, by 46.95%…

Meanwhile, the fund sold out its holdings in the world’s largest iron miner, Brazil’s Vale (previously CVRD), as well as its holdings in U.S. silver producer Apex Silver Mines, and also in Southern Copper Corp.

Source:

“Soros increases potash and FCX holdings, drops Apex Silver, CVRD, Southern Copper”
Dorothy Kosich
Mineweb, August 19, 2008

Last Friday, well-known bear Marc Faber spoke to Bloomberg’s Kathleen Hays about the euro’s performance against the U.S. dollar, commodities, and the global economy. Some notable excerpts from the interview included:

The global economy is in recession already…

The U.S. would now outperform for 3 to 6 months…

I think the dollar can continue to rally somewhat to say 1.47 against the euro, then there’s some support there. The Europeans will have to cut interest rates as well, because their economies are most likely much weaker than it’s perceived. The emerging economies are also much weaker than it’s perceived. And so, on a relative basis, if you put a gun on my head and said you had to buy stocks somewhere, I would by U.S…

I think commodities individually, could easily drop 50 percent, as some have already done, like nickel, lead, and zinc, and others will follow. But after that, I think that the bull market in commodities will reassert itself. But, my view was, that, for the second half of 2008 commodities would go down…

Well, let me put it this way, I personally am not buying U.S. stocks, but am long the dollar right now…

Where I’m also long and optimistic is essentially about Japan. And I would be very wary of the favorite trades of the last say, two years, long commodities, long steel stocks, long iron-ore companies, that kind of sector I would avoid…

You can listen to the 5 minute 18 second interview here.

Source:

Marc Faber Interview
Bloomberg, August 8, 2008

Yesterday afternoon, Bloomberg reported that commodities finished their best first half in 35 years, as the Reuters/Jefferies CRB Index of 19 raw materials rose 29% through June 30. However, well-known contrarian investor Marc Faber told the financial news outlet that demand for industrial commodities, including oil, will fall, along with prices. Bloomberg’s Monica Bertran and Millie Munshi wrote:

“The industrial-commodity complex is vulnerable because demand will slow down,” said Faber, publisher of investment newsletter the Gloom, Boom and Doom Report. “The economy is weakening, corporate profits will disappoint, valuations are not particularly attractive, and the financial sector that serves to channel savings into investment is in disarray.”

Demand for commodities will fall after raw materials including oil, corn, copper and gold touched record highs in the first half, Faber said in an interview on Bloomberg Television. The global economic slowdown will last a “very long time,” he said.

Photo by scol22, stock.xchng

Discussing the $400 billion in write-downs at banks and securities firms worldwide, the Swiss-born investor said:

“The financial crisis has been the appetizer. We still need the main dish.”

Source:

“Commodity Demand to Drop as Growth Slows, Faber Says (Update1)”
Monica Bertran, Millie Munshi
Bloomberg, July 1, 2008

This morning, Fortune magazine’s Brian O’Keefe wrote about the ongoing commodities boom. Of course, who can talk about hard assets without mentioning probably its most famous figurehead right now, Jim Rogers. After all, it was Rogers who called the beginning of the present commodities boom back in 1999. O’ Keefe had this to say about the Singapore-based investor:

One enlightened observer who’s not worried about a commodities collapse is Jim Rogers. The maverick investor, author, and one-time partner of George Soros famously predicted the bull market in hard assets back in the late 1990s and began putting his money in resources when most of us were still enthralled by the dot-coms. According to Rogers, the current highs may represent a market top, but hardly the peak.

“The bull market still has a long way to go,” says Rogers. “Is it time for a short-term correction? I have no idea. And even if we are due for a pullback, that’s not necessarily true for all commodities. Oil might be ready for a shock, but that doesn’t mean that zinc is.” (The price of zinc has, in fact, fallen by half over the past year because of a glut. Rogers says he’s monitoring industrial metals for the right moment to buy more.)

And how much longer can we expect the present commodities boom to last? The Fortune senior editor wrote:

History is on Rogers’s side. As he likes to point out, research shows that over the past 140 years the typical commodities bull market has lasted about 18 years. Rogers calculates that the current boom kicked off in early 1999, which means that if it conforms to precedent, we have almost another decade left.

Source:

“Hot Commodities”
Brian O’Keefe
Fortune, June 11, 2008