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  • August 20, 2008 06:19 PM EDT by Liz Claman

    Buffett-Gates vapor trail leads north to Canada

     Billionaire-buddies Warren Buffett and Bill Gates went on an 'Excellent Adventure' Monday.  Buffett tells me he and Gates, his good pal and Berkshire Hathaway (BRK) boardmember, hopped a plane to head north to an oilsands development in Alberta, Canada near Fort McMurray.  Buffett told me he took the trip to "just look around and learn a little" about the process by which oil is extracted from rocks.  The company that runs the massive multi-billion dollar project is Canadian Natural Resources (CNQ), whose stock ended up 7% today on the mere whiff Buffett visited the project.  NO investment has been made by him at this point.  Now, I should tell you that at past Berkshire Hathaway shareholder meetings I've attended, he and his longtime cohort Charlie Munger have been asked about whether they'd be interested in investing in oilsands.  "We don't understand it yet" was the response.  Clearly, though, Buffett's interest is piqued enough so that he at least wanted an "Oilsands 101" quickie class by going up there to visit.  But don't think Bill Gates is simply along for the ride.   In fact, Buffett told Fox Business in May that it was *Gates* who beat him to the railroad punch by investing in Canadian National Railway (CNI) before Buffett finally dove in much later by picking up large stakes in Burlington Northern (BNI) and Union Pacific (UNP).  But there's a lesson to be learned from Buffett's investment style: he won't commit a single dollar to any company until he fully understands the business and believes it fits into his tried and true investment parameters.  Now, sometimes he'll buy an entire business outright without ever seeing it if he just gets the sense it's exactly what he wants.  He did that with an Israeli auto parts maker, ISCAR....a business he told me is "the best he's ever see, run by the smartest people ever."  He's been known to read an annual report and then commit hundreds of millions of dollars to the stock.... witness Petrochina, an investment that made him and his shareholders billions.  But if it's publicly-traded, he scrutinizes annual reports and delves deeply into the bones of a company before he'll put his shareholders' (or 'partners' as he calls them) money to work.  He and Charlie admit their style is 'boring' and 'simple' but clearly it works. Buffett is the world's richest man, and Gates isn't far behind.   

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DaveinHackensack

Berkowitz beat them both to CNQ. It has been a top holding of the Fairholme fund for sometime.

August 22, 2008 at 2:50 pm

ed

Hi liz this is not part of the story but I just pick up an artical from the baltimore examiner. nice pice on G.M going to use solar panels at the the plant here in baltimore check it out

August 22, 2008 at 6:53 am

Robert Lee

Apparently, there is so much down there (so deep) that they have had to come up with new technologies to complement the standard practices already in place. If you can trust Mr. Buffett to invest, well, it is a sure thing then. Fort Mac T that is...

August 22, 2008 at 2:23 am

Mike Sharq

Ms. Claman: This is about your interview of the gentleman from Ohio Independent Business. Your retort of employees coming to work ill and spreading disease because they don't receive paid leave, let your California Commie and Lefty CNBC background slip into the SpinZone. We have enough Nanny State rules and when schools really educate kids, they'll know to save for sick days! Like your work on the show though. Regards Mike

August 21, 2008 at 3:59 pm

Barry Ritholtz

Fascinating stuff Liz -- Up til now, Buffetty ha snot been a huge energy investor . . .

August 21, 2008 at 9:33 am

LordRobot

Buffett is just greedy. Here is a guy that "complains" that he pays less federal tax than his secretary. Then he goes on says that taxes need to be hiked. This is a case of the rooster in the henhouse. Buffett has been a cleaver. All his life he took advantage of every tax break written into the law. Could he have voluntarily paid more tax? Sure he could pay out of the goodness of his heart. But he never has. But now that he has accumulated massive capital and knows it will never be touched, he wants to tax the young successful rising stars preventing them from getting rich. It is an old story. Joe Kennedy was a master and after his efforts at the SEC, made sure that honest hard working men and women would find a tough time obtaining the American dream of getting rich. As it stands now, the top 1% of the population pays 30% of all the federal income tax. The top 5% pays 60% of all taxes. That is disproportionate and unfair. These people do not use more rights than anyone else. They should not be punished for success. How rich are they? The top 5% makes incomes over 150 thousand dollars a year. That is not a lot of money. In fact it shows how poor America is if this is the top of the income earners. Equality in my eyes means all persons should pay taxes in an equal state to the services they use. I like consumption taxes. Why? They reward conservation they don't penalize your productivity. Obama who knows nothing about tax has been told by George Sorso that he should raise capital gains taxes. This siffles long term investing and discourages investment. It also protects the likes of Soros, Buffett, and Gates who obtained their wealth by skirting taxes. In this country, we have to get in step with the globe or we will become the third world country. With 3 to 4 billion low cost labor hands coming online, the worst thing that government can do is raise tax on the most productive Americans. This will crush the ambitions of youth to innovate and become rich. Also note one other point. We applaud Gates and Buffett for giving their wealth to charity, charity destined for Africa. The money was made in the United States markets with US dollars. Some 60 billion gets sent to Africa and removed from capital investment that could have enriched Americans. Before you pray at the alter of Buffett or Gates, watch their activities. Both of these gent were selling the dollars short for the last year. Helping to trigger the valuation crunch we have today. They got out they outfoxed the dumb working Americans and robbed their 401Ks with impunity. Sure as I write this, they will be out with their private equity capital ready to buy mortgage portfolios for ten cents on the dollar. But Buffett thinks the wealthy should be taxed much more aggressively meanwhile his accountants look for every loophole and take it.

August 20, 2008 at 10:11 pm

Barry Ritholtz

Interesting Liz Much of Canadian energy production -- including Oil sands -- is ripe for further US investment. And Buffett isn't a huge energy investor -- yet.

August 20, 2008 at 7:02 pm

about this blog

  • Liz Claman joined FOX Business Network (FBN) as an anchor in October 2007. Her debut included an exclusive interview with Berkshire Hathaway CEO and legendary investor Warren Buffett.

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