The transaction has many traits of a typical Buffett deal: he already owned a minority stake in Precision; he is a big believer in nuts-and-bolts industrial groups; and the company’s share price had come under pressure, falling by about a tenth.
Precision Castparts, based in Portland, Oregon, makes components for aircraft, power plants and other industrial uses.
“When Warren Buffett invests, he not only invests in a company but in an industry he sees decades of returns from”, said Michael Goldberg, the leader of Bain & Co.’s global aerospace and defense practice. Tumbling prices of crude oil and natural gas have only made matters worse although it doesn’t appear to have much better long term prospects. Even so, this is the company’s largest acquisition so far.
A regulatory filing released on Friday revealed that Jana Partners, the activist hedge fund run by billionaire Barry Rosenstein bought 2.5 million shares in the Q2 quarter.
George Morgan, a finance professor at the University of Nebraska at Omaha and a former investment adviser, said Buffett’s field of possible investments is limited because of the size he is looking for.
The company’s top customers include General Electric, Boeing, Airbus, Rolls-Royce, UTC and Spirit Aerosystems. It was an especially weak quarter for Berkshire’s insurance units but it illustrates the conglomerate’s increasing reliance on manufacturing, utilities and the railroad. (NYSE:PCP) have approved an agreement for Berkshire Hathaway to acquire, for $235 per share in cash, all outstanding Precision Castparts Corp.
With many U.S. companies boosting their earnings per share by cutting costs and buying back stock instead of by growing their businesses, stock valuations remain a concern. The firm had revenue of $2.41 billion for the quarter, compared to analysts’ expectations of $2.51 billion.
BOSTON Legendary investor Warren Buffett was not the only one to turn sweet on Precision Castparts Corp this summer.
Given that at least one analyst has set that high target price for NYSE:PCP shares at $252 per share, the investigation concerns whether the offer is unfair to NYSE:PCP stockholders.
Precision Castparts derives 70% of its $10 billion in annual sales from aerospace.
We did a story a few days ago about the alleged Berkshire Hathaway’s multi billion dollar deal.
Berkshire divested some of its shares in National Oilwell Varco, Inc.
Shares of Precision Castparts surged 19 percent, or $37.04, to close at $230.92.