This is a good article to read about Berkshire Hathaway’s evolution as a company. They are acquiring a small portion of Paytm, which is a digital payments company in India.
Buffett, who is essentially Berkshire Hathaway in many ways, is known for much more domestic investment. He believes that there will be great long-term growth in the United States for many years to come.
Like any investor or business man, time effects their thinking. With the US stock market at record highs, he is finding it difficult to make the size of investments appropriate for Berkshire at reasonable prices. India is a huge potential market of the future. The key is to be willing and patient to wait for events to unfold. The success of this investment will not be clear in a year or even many years.
Todd Combs is one of Berkshire’s portfolio managers. He is the in charge of this deal. He is also in charge of the healthcare initiative that Berkshire has pursued with Amazon and JP Morgan. Buffett clearly has confidence in Combs’ performance and is ramping up his responsibilities.
Berkshire has over 100B in liquid assets. While this deal is a large one in terms of US dollars, at $365 million, it is only 1/3 of one billion. That is not a very big chunk of investment given that Berkshire has over 100B in liquid assets. The investment is more a vote of confidence in Combs' abilities.
Berkshire usually stays with companies that are pretty defensive, are run really well and make steady returns year after year. Berkshire has made billions by bumping along like the turtle from the story of the turtle and the hare. Steadily moving while staying with the tried and true. Their entry into Apple has been a change, but Apple has now matured and represents a steady earner with a strong competitive moat. So, the investment in Paytm should represent some pretty consistent, although slowly evolving, characteristics of a typically Berkshire holding.
Paytm must have a great management team. Otherwise Buffett wouldn’t touch it with a ten foot pole. Only time will tell, but I sure would put my money on that pony! We’re at the gate and we’re off.
