Buffett, Who Deems Stocks High, Will Still Keep McDonald's (Published 1997) (2024)

Warren E. Buffett, the chairman of Berkshire Hathaway and a man whose investment prowess has made him the second-richest man in America, says he thinks that most stocks are overvalued. But he excludes the shares of his own company, and its newly released annual report shows that he has been loading up on shares of the McDonald's Corporation.

At the end of last year, Berkshire Hathaway owned 30.2 million shares of McDonald's, which it purchased at an average cost of $41.96 a share. That gave Berkshire Hathaway a 4.3 percent stake in the fast-food chain. So far, the investment has been profitable, but hardly a barn-burner. The shares closed on Friday at $44.125.

The annual report discloses the McDonald's ownership, which is up sharply from the last reported Berkshire holding in the stock, of 9.34 million shares, at the end of September 1995. But it did not comment on the additional holdings or the reasons for them.

Mr. Buffett, in his letter to shareholders, was much more talkative about the broad stock market. ''You can, of course, pay too much for even the best of businesses,'' he wrote. ''The overpayment risk surfaces periodically and, in our opinion, may now be quite high for the purchasers of nearly all stocks.''