'You're going to get paid back,' celebrated stock picker assures wealthy investors
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the US print edition of The Wall Street Journal (June 23, 2017).
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Warren Buffett, the world's most famous stock picker, has a new sales pitch: buy Israel's bonds.
The billionaire investor and Berkshire Hathaway Inc. chairman hosted a lunch and dinner in New York last week to encourage investments in Israeli bonds. The events raised about $150 million in investments, according to the Development Corp. for Israel, the broker-dealer that sells Israeli bonds.
Mr. Buffett, of course, is better known as a booster of stocks. He recommends that nonprofessional investors put their wealth in low-cost stock index funds and often says the stock market will continue to rise in the coming decades.
But he said many wealthy people hold bonds, because they are more concerned with maintaining their wealth than achieving the highest returns. The wealthy are whom Mr. Buffett has targeted with his pitch.
"I do not tell them that bonds are a place to put your money generally, but I will tell them that you're going to get paid back" by investing in Israeli bonds, said Mr. Buffett in an interview. When Mr. Buffett was seven, he requested a book called "Bond Salesmanship" for Christmas.
He said he likes to invest in Israel because it is a success story, similar to the U.S. Both are relatively new countries that have been founded on open markets and an entrepreneurial spirit.
"From the standpoint of accomplishments beyond the financial returns...I think that it's an excellent choice."
Mr. Buffett's ties to Israel and to the American Jewish community go back decades. His first wife, Susie, had Jewish friends and traveled to Israel, he said. Mr. Buffett told attendees at last week's dinner that many of the most important mentors in his life were Jewish, said real-estate developer Larry Silverstein, who attended the event.
The yield on the benchmark 10-year Israel government bond was 2.055% Wednesday, according to Thomson Reuters, down from 2.063% at the end of last year. Yields fall when bond prices rise. Israel's economy grew 4% last year and is projected to grow 3.25% this year, according to the Organization for Economic Cooperation and Development. Israel's currency has risen against the dollar this year, and the country's central bank opted last month to keep its benchmark interest rate at a record low.
Mr. Buffett's connection to Israeli bonds started last year. Berkshire Hathaway Guard Insurance Cos., a commercial insurer in Wilkes-Barre, Pa., that Berkshire acquired in 2012, held Israeli bonds that were set to mature. Development Corp. for Israel, which is commonly known as Israel Bonds, couldn't confirm whether the company wanted to reinvest. The corporation's regional director wrote a letter to Mr. Buffett, who called back, agreed to reinvest and invited Israel Bonds officers to visit him in Omaha.
"He really liked the fact that he could support Israel...through the purchase and investment in Israel bonds," said Stuart Garawitz, Israel Bonds' vice president of sales, who visited Mr. Buffett in Omaha in April 2016.
Mr. Buffett subsequently hosted a dinner for 40 in Omaha in November, which raised $60 million for Israeli bonds, including $5 million of Mr. Buffett's personal money.
Berkshire invested $4 billion in Israeli metalworking company Iscar in 2006, the conglomerate's first foreign acquisition, and Mr. Buffett traveled to Israel to see the operation. He later toured Europe with Iscar executive Eitan Wertheimer to try to drum up more overseas deals.
Mr. Buffett also donated $10 million to a hospital in Israel in 2013, according to press reports at the time.
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June 23, 2017 02:47 ET (06:47 GMT)