Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street

Chapter 13. The Fogs of War, Religion, and Politics

	What would happen if Internet communications were disrupted, how would we trade?
	--Warren Buffett to Janet Tavakoli, August 25, 2005

While the rest of the world seemed bent on mutually assured destruction—pursuing wealth through leveraged mortgage loan products, hedge funds, and leveraged buyouts—Warren had already taken steps to do something about the weakening dollar problem for Berkshire Hathaway shareholders. He used derivatives to take positions in the relative strength of foreign currencies, and he looked abroad for well-run companies that earn money in foreign currencies.

On October 25, 2005, Warren received a letter from Eitan Wertheimer, chairman of Israel's ISCAR Metalworking, saying: "Berkshire Hathaway would be the ideal home for ISCAR."^[424] On May 5, 2006, Berkshire Hathaway used Business Wire to announce it had agreed to acquire 80 percent of the tool-cutting company. Two months later on July 5, 2006, the acquisition was completed. Berkshire Hathaway paid $4 billion.^[425]

ISCAR's main plant is located in Israel's Galilee around 7.5 miles south of Israel's border with Lebanon. It does business in more than 60 countries, has a good source of foreign revenues (a hedge against a weakening dollar), and it is a business with products the world needs: cutting tools used with machine tools. The management is in place, and the family is dedicated to the business.

Eitan Wertheimer is the chairman of ISCAR, and 20 percent of ...