May 8, 2006, - 9:58 am
By Debbie Schlussel
In the aftermath of the scuttled Dubai Ports World deal to run our major ports, capitalists were lecturing us far and wide about the “global economy.” Leftist New York Timeser Tom Friedman joined the chorus with his “World is Flat” book.
The world may be flat, but that doesn’t mean that principles can’t come to play in international investing.
This weekend, billionaire investor Warren Buffett announced that he purchased a controlling stake in Israeli tool manufacturer, Iscar Metwalworking of Tefen, Israel. Iscar is the world’s leading innovator of metal cutting tools and techniques for machining.
According to USA Today, the deal is worth $4 billion, and Buffett’s Berkshire Hathaway bought an 80% stake in the company. It was announced at the BH’s annual shareholders’ meeting, over the weekend, at which Buffett stressed his vision of better opportunities in foreign markets.
That Buffett chose an Israeli company for his company’s first big overseas deal is significant. Buffett’s investments are never constrained by political views or moral principles (he’s very liberal). He invests based solely on the bottom line and potential for future profit and growth. He subscribes to the Friedman Capitalism Without Limits or Principles view.
But, still, it’s good to see that Buffett was not scared away by Palestinian terrorists and Islamist jew-haters, and invested in an Israeli company that he saw as possesssing a profitable business model. His investment is an important infusion of money into a family-owned business in a country where Israelis are under siege.
And it demonstrates that Warren Buffett does not buy into the divestment (from Israel) message. That’s very important, since he is watched and emulated by anyone and everyone on Wall Street and beyond.
Buffett says he plans a trip to Israel in September. If he’s smart, he will also invest in heavy security on a trip where he will surely be a target of Islamic terrorists who want to make a statement.
Another significance of the investment is not so good: Buffett told his shareholders that he is planing more and more foreign investments as a hedge against the declining dollar. He said his conviction that the dollar will decline is “as strong as ever.”
For the details on how Buffett decided to buy Iscar, read Ha’Aretz’s profile and interview of Eitan Wertheimer, whose family built the company.
Tags: Berkshire Hathaway, Debbie Schlussel, Eitan Wertheimer, Haaretz, Iscar Metwalworking, Israel, Israeli Co., metal cutting tools, New York Timeser Tom Friedman, Tefen, tool manufacturer, USA Today, USD, Wall Street, Warren Buffett, Warren Buffett Says