How Will Warren Buffett Spend The Cash?
Berkshire Hathaway reported their Q2 earnings on Friday afternoon, with the company reporting net income of $6.4 billion or $3,889 per Class A share. Revenues from Berkshire Hathaway's combined subsidiaries, which includes Geico insurance and BNSF railroad, rose to $49.76 billion from the $44.69 billion that was posted in Q2 of last year.
One of the most eye-popping numbers from Berkshire Hathaway's Q2 report was the $55.5 billion in cash that the company had on its books as of June 30th. This is the most cash that the company has ever had in its coffers at the end of any single quarter in its history.
Despite the fact that the company is awash in cash, Warren Buffett doesn't seem to be in any big hurry to spend it. As long as Berkshire Hathaway doesn't make any big acquisitions, the cash will continue to pile up at a rate of over $1 billion per month.
Buffett has stated that he is waiting for a "fat pitch" to hit - meaning, a company that can deliver strong returns for Berkshire Hathaway over the long-term, as well as a company that isn't "expensive". With the markets flying high, finding a company that fits these criteria is like trying to find the Sasquatch.
Warren Buffett has been able to find some deals in the past couple of years, including his buyout of HJ Heinz with 3G Capital. Having said that, the markets have continued to soar since that buyout was announced, so Buffett will presumably have an even harder time finding a good deal for his company.
With Buffett rarely engaging in share buybacks and not being a fan of paying dividends, the cash on Berkshire Hathaway's books will likely continue to accumulate for the foreseeable future.
Filed under: General Knowledge