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ETF Specialist

Warren Buffett and Time-Horizon Arbitrage

Buying assets with long-term value.

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"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." --Warren Buffett

Buffett must have had those words in mind when he and private-equity firm 3G Capital offered to buy out H.J. Heinz Company for a hefty 20% premium to market value. At the time (not too long ago), consumer staples stocks were widely thought to be expensive. Eyebrows were raised, and some went as far as to say he and 3G overpaid. A few months later, he confounded expectations again by agreeing to buy out  NV Energy (NVE) at a 23% premium, again when the consensus was that utilities were expensive.

Samuel Lee does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.