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Buffett Says Social-Networking Sites Overpriced Ahead of IPOs

Warren Buffett in India
Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., listens during a news conference in New Delhi. Photographer: Prashanth Vishwanthan/Bloomberg

March 25 (Bloomberg) -- Warren Buffett, the billionaire stock picker and takeover specialist, said investors should be wary of valuations for social networking websites as some of the industry’s biggest startups prepare for initial share sales.

“Most of them will be overpriced,” Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., said today in New Delhi. ”It’s extremely difficult to value social-networking-site companies,” he said, without specifying companies. “Some will be huge winners, which will make up for the rest.”

Facebook Inc., owner of the most popular social-networking site, drew investors including Goldman Sachs Group Inc. in private stock sales that valued the company at $50 billion as of January. Groupon Inc., the Chicago-based daily deals site, has held talks about an initial public offering that would value it at as much as $25 billion, two people familiar with the matter said earlier this month.

Buffett, 80, has shunned technology investments in favor of industrial, financial and consumer-goods holdings in his four decades at Omaha, Nebraska-based Berkshire.

Twitter Inc. , the microblogging site, said in December that it was valued at $3.7 billion after receiving a $200 million round of funding led by venture capital firm Kleiner Perkins Caufield & Byers. The company’s value may now be closer to $5 billion, according to SharesPost Inc., a private-share exchange.

To contact the reporters on this story: Pooja Thakur in Bangalore at pthakur@bloomberg.net; Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net; Andrew Frye in New York at afrye@bloomberg.net.

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net Dan Kraut at dkraut2@bloomberg.net;

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