Buffett Doesn’t Plan to Add to Stock Holdings

Billionaire investor Warren Buffett believes that almost all stocks remain overvalued -- even after three years of market declines -- and he doesn’t plan to buy more shares of companies he already owns.

“Despite three years of falling prices, which have significantly improved the attractiveness of common stocks, we still find very few that even mildly interest us,” Buffett said in excerpts of his annual letter to his shareholders, published Monday on Fortune.com. “We continue to do very little in equities.”

Some pundits said Buffett’s comments contributed to the day’s losses on Wall Street.

The full letter is scheduled for publication Saturday along with financial results of Berkshire Hathaway Inc., Buffett’s Omaha-based investment firm.

In contrast with his aversion to stocks, Buffett favors corporate junk bonds and loans to similar high-risk companies. His assets in those sectors rose sixfold to $8.3 billion in 2002.

Buffett said he expects to have “occasional large losses” in junk bonds, but said he has done “reasonably well in this field” so far. The bet is that the high yields paid on the bonds will offset any losses on firms that fail.

But he warned that in “purchasing junk bonds, we are dealing with enterprises that are far more marginal” than the blue-chip stocks he has long favored.

Buffett assistant Debbie Bosanek confirmed the excerpts.

Berkshire Hathaway A shares added $1,700 to $63,400 and the company’s B shares gained $45 to $2,110, both in New York Stock Exchange trading. Both classes of shares have declined about 13% in the last year.