Friday, December 28, 2007

GIC & Temasek Outfoxed Warren Buffett!!!

Segment of an interview by CNBC:

Melissa Lee (CNBC): Mr. Buffett, if I can just jump in. It's Melissa Lee. I'm just curious. Have you been approached by a major financial institution in terms of whether or not you would be interested in buying a stake?

Buffett: Yeah. Yeah.

Melissa: You have been? You turned them down?

Buffett: They sometimes do it indirectly because they don't like to hear 'no' directly. (Laughter)

The reason Buffett gave for not investing in the financials was:

Buffett: No, I mean, there have been some mistakes made in banking. As (CEO) John Stumpf of Wells Fargo said, he said, 'I don't know why the banks had to find new ways to lose money when the old ones were working so well.' And they managed to do so. And you don't get all those, you don't get all the problems behind you in a short period of time. So I would say that there are a number of banks that may do as well or better than they did in 2007, because they already started getting hit then. But, there were some sources of income that were kind-of illusionary but nevertheless got reported as income over the last few years. They won't have those. They'll have the clean-up of those. So it's certainly possible some of the big banks aren't going to hit their highs on earnings for a few years.

Oh Warren Buffett is such a whimpy indecisive investor. He failed to spot the value that our GIC & Temasek saw in UBS and Merrill Lynch. You can tell from what he said that he is also not as far sighted as the people running our GIC and Temasek. I guess Ho Ching must have picked up investing skills more advanced than Buffett to be able to see so much value in these trouble entities.

Warren Buffett has been beaten by GIC & Temasek to these deals. As Singaporeans, we should feel very proud of this.

Here's a Singaporean who appreciate what has been accomplished by our very own GIC & Temasek. (click on image it to read).


Anonymous said...

I don't know where the letter (image) is published. It certainly looks like one of those that regularly featured in official media in communist/totalitarian states.

Happy holidays to you and your readers.

Anonymous said...

Ho Ching has a special knack for turning untroubled entities into troubled entities. Can you name a few big ones?
Maybe they hope to turn troubled entities into untroubled ones in view of this jinx.

Why that Lee such a fool? He thinks he's richer & smarter than people from HK/Japan when it comes to investments?

Anonymous said...

Singapore: The little red dot that could

lose money. Your CFP gone!

Wake Up Singaporeans.

Anonymous said...

Jim Rogers, a former partner of George Soros in the famed Quantum Fund) The fund manager, who has traveled extensively in emerging markets and lives part of the year in Asia, says sovereign wealth funds in Abu Dhabi and Singapore that recently made large investments in Citigroup and UBS AG (UBS, news, msgs) are likely to lose a lot of money on their ploys. "They're making a big mistake; these banks have many more problems still ahead. They should wait until these companies are really on the ropes a few years from now . . . and trading at $5 a share."

But aren't they supposed to be the smart money? Maybe not. "I know these people, and they have never given me the impression that they're smarter than anyone else," Rogers says. "They have gigantic amounts of money, but they've made a bad judgment in these cases."

Anonymous said...

What do we expect from a perpetual megalomaniac lost in his delusion of grandeur even as a nation's money goes down the drain fast through stubborn follies and desperate gambles?

Perhaps due to the nation's strategic importance, someday not too far ahead another party might have to salvage this little nation from its own financial troubles and govern indirectly through local proxies who already exist (in financial and political sectors) but keeping fairly low profile.

Might as well be, since responsible sovereignty has since been totally abandoned some 15 years back for uncontrolled legalised greed, foolish fame and dictatorial power by the powers that be.

Voodoo said...

What are you people talking about? All investment involves risks. The bigger the stake, the bigger the risk. The Suzhou industrial park was once condemned as bad investment. But it has since opened many other profitable 'possibilities'.

Look long term. Our government is the best at spending people's monies.:=)

Anonymous said...

"What are you people talking about? All investments involves risks. The bigger the stake, the bigger the risk."

The difference is that this is other people's money. If it is the money of the familee, no quarrel with that.

bhoven said...

Maybe after you have been on the international advisory board of big time international banks like Citigroup, JP Morgan, UBS and Barclays, you get a better handle on things financial and are better informed on investments. This should be more fun than experimenting with foreign hires at local institutions...who incidentally all leave a couple of years later but not before fumbling and getting rich in the process.

Anonymous said...

Merrill Lynch is now wobbling.

Breaking news 4 hrs ago : Merrill seeks more funds to avoid crisis. $4.4bn from Singapore's Temasek not enough

If China and Middle East sovereign funds says no to the invitation to invest, PAP is in for a failure much bigger than Shin Corp.

Anonymous said...

Wonder if Temasek was trying to outdo GIC by so hastily pumping in $$ into Merrill Lynch after the former's UBS "coup" - remember Tony Tan's remark that they "act totally independent " of each other.

Yes, would be fun if only our hard earned national savings were not involved....

LuckySingaporean said...

anon 1:27,

I wanted to take a look at Citibank a little closer to see if there is an opportunity in US financials. But after they paid 11% per annum for the Abu Dhabi money. That was a red flag to say that the problems run alot deeper. 11% is above junk bond yield which is 9%. The other problem is half the earnings from issuance various paper, CDO, MBS, and earnings from the SIVs are gone. The other half will decline due to the US economic slowdown. That will mean they will stay below half peak earnings for 2-3 yrs. In adddition, the level 3 assets and alot of paper stuck in the credit crunch cannot be properly valued....and may throw up masty surprises like the one we see now from Merrill.

I guess the GIC & Temasek are just very brave long term investors. They are definitely in it for the LONG TERM because they can't be expecting to make money in the medium term.

Now Merrill needs money even more desperately, I wonder if the next round of funds will see a better deal that what Temasek got.

Anonymous said...

I am so proud of the big boys running our state reserves. Not every country has talent (local or foreign) that can out-think Warren Buffett.

I am so proud to be a Singaporean! Looking forward to retiring on my CPF.

Anonymous said...

Hi Lucky,

If we read this quite informative blog nothing seems to be going well with the US economy.

Still I put my bet in Asia's present historical rise now and its ability to decouple from the US.

Asian countries and their stock markets if they do not want to re-experience another Asian Economic Crisis will also have to allow themselves be swept into the orbits of the large emerging economies.

The BRIC countries and EU's own emerging economies combined surely represent a far larger economic powerhouse than the US.

Asians should be thinking and talking less about the US and more about their own continental vibrancy. After all, how stock markets perform has very much to do with such a collective psychology.

In a certain way this is already happening to some extent and I want to believe there is enough momentum and will on the part of ex-US countries to determine their own economic destinies. For that they have to work hard on their collective perception.

I also believe being the host for the 2008 Olympics, China is not about to allow its economy to sink during this critical period.

Anon 1:27

Anonymous said...

The nepotism family can outfoxed anyone as long as it is not their money.

They gain, it is their to keep. They lose, it is for you to bear ! Amazing coffers and cronies.

The world must realize that the most corrupted family is our government because everything so corruptable is been legalised.

Anonymous said...

From Bloomerberg:

"Merrill Lynch to Take $15 Billion Mortgage Writedown, NYT Says"

Anonymous said...

its sad to read such a tasteless entry...after all its your opinion. you really think Warren Buffet has been outfoxed? haha think again. does suzhou ring a bell to you? i guess the risks involved this time round is too large and not worth it.

Anonymous said...

That was December 2007. Come September 2008 and Merrill Lynch no longer exists. Looks like you just can beat the man.

Web Design Company said...

Nice information, many thanks to the author. It is incomprehensible to me now, but in general, the usefulness and significance is overwhelming. Thanks again and good luck! Web Design Company

un sex shop said...

Well, I do not really believe this will have success.

rocky case said...

Stephen Stapinski

Really your blog is very interesting.... it contains great and unique information. I enjoyed to visiting your blog. It's just amazing.... Thanks very much for the share.