Everything Warren Buffett: SEEKING ALPHA: Buffett buys Nalco

Saturday, February 21, 2009

SEEKING ALPHA: Buffett buys Nalco

Warren Buffett’s track record speaks for itself. He entered this crisis with more than $40 billion at his command and he’s been gobbling up some fantastic deals ever since. Many of those deals, as we noted, were fantastic deals with unique structures (e.g. Goldman Sachs “synthetic convertible preferred” financing) and individual investors should not follow in behind with common shares.

Despite a number of great deals Buffett led his holding company, Berkshire Hathaway (NYSE:BRK.A), into over the past few months, he managed to buy into two positions that regular investors can to.

One of them was Constellation Energy Group (NYSE:CEG). This well-publicized deal was part of a takeover deal, and it fell through when a higher bidder came along.

Last quarter, Buffett was buying common shares of Nalco (NYSE:NLC). Nalco is a relatively small water services company (market cap $2.7 billion). It’s nothing near the size of the Coca-Cola’s (KO) and the Johnson & Johnson’s (JNJ) Buffett’s known for buying, but it has everything else Buffett looks for like solid cash flow, years of growth ahead of it, a “moat” protecting it from competition, etc.

Although Berkshire only picked up around 8.7 million shares of Nalco (currently trading for around $11.60), it was good to see it uncover some value in the market somewhere. Who would have thought it would be on a global water infrastructure company?

It’s not only Buffett continuing to bet big though. Some other big savers have been waiting to for this opportunity.