Warren Buffett also makes mistakes.
On Saturday, a 90-year-old billionaire said he “heavy amount” when Berkshire Hathaway Inc. spent $ 32.1 billion to purchase Precision Castparts Corporation, an aircraft and industrial parts maker, which was its biggest acquisition in 2016. I paid. “
Berkshire canceled the value of $ 9.8 billion in precision last August as the coronavirus pandemic robbed air travel and demand for Portland, a product of Oregon-based units.
Buffett said in an annual letter to investors that he had purchased “a great company-the best in its business,” and Berkshire was able to continue to take charge of Precision’s CEO Mark Donegan. Good luck. “
But Buffett said he was “too optimistic about the potential for PCC’s normalized interests.”
According to Berkshire, Precision cut more than 13,400 jobs in 2020, or 40% of the workforce, and has recently begun to improve its profit margins.
“I was wrong … by determining the average future revenue, and as a result, I was wrong in calculating the right price to pay the business,” Buffett wrote. “PCC is far from my first error of that sort, but that’s a big problem.”
Two years ago, Buffett granted Kraft Foods “overpayment” when Berkshire and private-equity fund 3G Capital merged with Kraft Heinz in 2015 to form Kraft Heinz.
And in a 2008 annual letter, Buffett said the 1993 purchase of Dexter Shoe exacerbated the error by purchasing a “valueless business” and using Berkshire shares instead of cash to fund the acquisition. Called the “worst deal”.
“I will make more mistakes in the future-you can bet on it,” he wrote.
Berkshire’s longtime investor Tom Russo welcomed Buffett’s candidness.
“I respect Warren, who was personally responsible for Precision Castparts,” he said. “Few managers try to acknowledge their responsibilities rather than pass them on.”
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Have you made a $ 10 billion mistake?Warren Buffett did
Source link Have you made a $ 10 billion mistake?Warren Buffett did