Warren Buffett, in the latest of his annual letters to Berkshire Hathaway shareholders, published on Friday, noted the one large sale his company made last year, its stake in PetroChina.
We reproduce his commentary here, without any of our own. Its Buffettry at its best, both Warren the investor and Warren the wry wit, topped off with a deft and subtle parting swipe against the Dafur activists who had pressed him to sell because of China’s oil interests in Sudan.
“In 2002 and 2003 Berkshire bought 1.3% of PetroChina for $488 million, a price that valued the entire business at about $37 billion. Charlie [Munger] and I then felt that the company was worth about $100 billion. By 2007, two factors had materially increased its value: the price of oil had climbed significantly, and PetroChina’s management had done a great job in building oil and gas reserves. In the second half of last year, the market value of the company rose to $275 billion, about what we thought it was worth compared to other giant oil companies. So we sold our holdings for $4 billion.
A footnote: We paid the IRS tax of $1.2 billion on our PetroChina gain. This sum paid all costs of the U.S. government – defense, social security, you name it – for about four hours.”
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September 27, 2008 at 4:06 pm
[...] away from $488 million investment in PetroChina in 2002/03 with a $3.5 billion profit in 2007 (see Buffett On PetroChina). Now he is putting down $231 million for a 10% stake in BYD Co., China’s largest maker of [...]