After the market closed on Friday, August 4, Berkshire Hathaway (NYSE:BRKa) released its Form 10-Q for the quarter ending June 30, 2017. This filing revealed a record cash position of $100 billion as compared to $96 billion on March 31 and $86 billion as of December 31, 2016.
Warren Buffett previously stated that Berkshire intends to hold a permanent cash position of $20 billion and would like to invest the remaining cash of $80 billion since it is currently earning a rate of return close to zero. What are Berkshire’s likely options?
There are three approaches that Berkshire is likely follow:
(1) Acquire one or more large companies such as its 2016 purchase of Precision Castparts for $32 billion and its 2010 acquisition of Burlington Northern Sante Fe for $26 billion (for the 77.4% it did not already own). Warren Buffett will participate in friendly deals only and will avoid auctions.
(2) Partner with 3G Capital to provide $10 billion or more to acquire companies such as the acquisition of Kraft by Heinz (to form Kraft Heinz) in 2015.
(3) Common stock investments such as Berkshire’s 2016-17 purchase of shares in Apple (NASDAQ:AAPL) which are currently valued at about $20 billion. Berkshire’s equity investments equaled $137 billion on June 30. (Warren Buffett’s portfolio managers, Todd Combs and Ted Weschler, each manage about $10 billion.)
Warren Buffett is extremely patient and will invest only when the opportunity is very attractive. With the stock market at all-time highs it is becoming more difficult to find undervalued stocks. However, future market fluctuations should provide additional opportunities.
There wasn't much to be said about the gains or losses from Friday, but volume spiked which disguised the intention of either bulls or bears. Friday's flat action probably best...
Add a Comment
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.