USA: Warren Buffett called his new stake in Anheuser-Busch Cos., an investment in a "fascinating" industry
Warren Buffett called on April 30 his new stake in Anheuser-Busch Cos., USA largest brewery, an investment in a "fascinating" industry that nevertheless may not generate quick payoffs for Berkshire shareholders, Reuters commented.
St. Louis-based Anheuser-Busch's announcement on April 21 that Buffett's Berkshire Hathaway Inc. had acquired an unspecified "significant" stake in the company sent its shares up more than 6 %. Investors keenly watch, and often promptly follow, the investment activity of Buffett, the world's second-richest person.
Anheuser-Busch is "going through a period that is certainly less fun for them than was the case a few years ago," Buffett told shareholders at Omaha, Nebraska-based Berkshire's annual meeting. "Beer industry sales are very flat. Wine and spirits have gained."
Berkshire has not disclosed its stake in Anheuser-Busch.
On April 27, Anheuser-Busch, whose products include Bud Light and Michelob Ultra, said first-quarter net income fell about 7 percent to $513 million, or 65 cents per share. Lower U.S. beer volume, rising commodity prices and increased marketing costs were among the reasons for the decline.
The company's shares closed on Friday at $46.87. Despite the Buffett investment, they have fallen 8 percent this year, though they are up 33 percent on a split-adjusted basis over five years.
Buffett said he views beer as a "fairly easy to understand" product. Buffett has traditionally favored straightforward businesses, and invests in dozens of consumer companies. He also focuses on long-term investing.
"What's happening in the beer industry is fascinating to me and to Charlie," he said, referring to Berkshire Vice Chairman Charlie Munger, who sat by him. "The beer business is not going to grow significantly in the U.S. Worldwide, beer is popular in a great many places, and Anheuser-Busch has a very strong position. I would not expect the earnings to do much for some time, but that's fine for us."
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