WARREN BUFFETT has lost $310 million (£162 million) betting against the US dollar. But the world’s second-richest man and best-known investment guru is undeterred and continues to position Berkshire Hathaway, his investment company, for dollar weakness.

Admitting the loss to 19,000 shareholders at the company’s annual meeting at the weekend, Mr Buffett repeated his concern about America’s trade and budget deficits. “The world has demonstrated a diminishing enthusiasm for dollars over the last few years as they get flooded with them,” he told the meeting in Omaha, Nebraska.

“Does that lead to some tipping point at some point? I have a hard time thinking about any outcome from this that involves an appreciating dollar.”

Berkshire still has $21 billion of assets in non-dollar currencies, down slightly from $21.4 billion at the end of last year.

The dollar’s firmness in the first quarter represented a sharp reversal for Berkshire, which made a $1.63 billion foreign currency gain from the dollar’s decline in the last quarter of 2004.

At the end of last year, the dollar fell, pushing the euro up to $1.34. But in January and February the dollar recovered and the euro dropped back to $1.27, as money crossed the Atlantic to take advantage of higher US interest rates.

The difference is set to widen this week with the the US Federal Reserve tipped to raise rates to 3 per cent, while the European Central Bank is expected to keep them at 2 per cent.

Mr Buffett said that, overall, Berkshire would report “strong” first-quarter profits, boosted by insurance revenue, but that currency trading losses would lead to an overall loss on investments.

Mr Buffett, 74, revealed his continuing struggles to identify good investments at a fair price, revealing he was now holding about $45 billion in cash, $10 billion more than a year ago.

He had no major acquisitions in sight, but said Berkshire was poised to announce one acquisition in the insurance field that will be worth nearly $1 billion.

“We’d love to have one (an acquisition) in the $5 billion to $10 billion range,” Mr Buffett said. “At the moment we’ve got more money than brains, and we hope to do something about that.” In a break with the past, Mr Buffett also revealed that he was considering paying a dividend for the first time in the medium term. But he appeared defensive as shareholders asked about regulatory investigations into insurance. Berkshire’s General Re reinsurance unit is being examined in the US and Australia.

In one case, regulators are studying a contract that helped the troubled insurer American International Group (AIG) to make its results look better. Mr Buffett said: “To protect the integrity of any investigation like this, investigators do not want one witness talking with other witnesses, because people can tailor their stories.”

Asked at what point a reinsurer might bear responsibility for another company’s improper activity, Mr Buffett said: “It really gets down to whether there is knowing participation.”

“I don’t really think I should comment on AIG,” Mr Buffett said in response to another question. “There will be more disclosure on the situation at AIG, and I really don’t know about anything that will be in that statement (the imminent annual report). I will read that statement, and I will read it with interest.”

Asked about Hank Greenberg, the ousted chairman of AIG, Mr Buffett said: “Hank Greenberg was the number one man in insurance. He developed an extraordinary company in his lifetime. But in terms of evaluating where it stands now, what will be revealed in the (filing) when it comes out, I just have no idea.”

Charlie Munger, vice-chairman of Berkshire and Mr Buffett’s chief lieutenant, said: “Whatever comes along, people are going to find that a lot of what was done over the years was right at AIG.”

BOTTOM LINE ON BILLIONAIRE

• At $44 billion (£23 billion), his wealth is second only to that of Microsoft’s Bill Gates, who has just joined his board
• $1,000 invested in his company Berkshire Hathaway in 1965 would be worth nearly $3 million today
• His favourite companies include American Express, Coca-Cola and Washington Post Group
• He shuns investing in high-tech companies because he says he does not understand them
• Aged 74, he says that after his death 99 per cent of his wealth will go to good causes

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