International Investing Doesn't Have to Be Scary
These 5-star foreign stocks have familiar business models.
Earlier this year, I was in Omaha, Neb., for Berkshire Hathaway's (BRK.B) annual meeting. While Morningstar has written extensively about the meeting, I wanted to take some of Buffett's comments and look at the international implications.
Buffett was asked about his investment in international large-cap company PetroChina (PTR). The questioner had heard that Buffett only read the annual report and hadn't talked to management or others and wanted to know if that was correct. I think Buffett's answer provides some key insights to international investing.
Paraphrasing him, he said: The disclosure in the annual report was very good. It provided information on proven reserves, production rates, and lifting and other extraction costs. With this information I could compare PetroChina to other major oil companies that I am familiar with and value the company. My calculation said it was worth about $100 billion. When I looked at the market valuation and saw it was only $35 billion there was no need to go any further--it would have been a waste of my time--time that I should be using to buy the stock.
Allan C. Nichols has a position in the following securities mentioned above: BRK.B. Find out about Morningstar’s editorial policies.