Posted on 02/24/2018 7:12:48 AM PST by SeekAndFind
Warren Buffett's Berkshire Hathaway is itching to do a massive acquisition, but is having a difficult time due to elevated valuations.
The Oracle of Omaha explained his buying criteria for deals in his 2017 annual letter to shareholders released on Saturday.
"In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price," he wrote. "That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high."
At year-end last year Berkshire Hathaway had $116 billion in cash and short-term Treasury bills compared to $86.4 billion at the end of 2016, the letter revealed.
"Berkshire's goal is to substantially increase the earnings of its non-insurance group. For that to happen, we will need to make one or more huge acquisitions. We certainly have the resources to do so," he wrote. "This extraordinary liquidity earns only a pittance and is far beyond the level Charlie and I wish Berkshire to have. Our smiles will broaden when we have redeployed Berkshire's excess funds into more productive assets."
Buffett said Berkshire Hathaway is a big beneficiary of corporate tax reform. The tax overhaul, which President Donald Trump signed into law in December, lowers the corporate tax rate to 21 percent from 35 percent.
For 2017 the company had a $65 billion gain in its net worth or increase in its shareholder equity.
"The $65 billion gain is nonetheless real – rest assured of that. But only $36 billion came from Berkshire's operations," he wrote.
(Excerpt) Read more at cnbc.com ...
Though in my case there’s a LOT less money involved, I’m in the same boat. Time to look at foreign investment?
Buy low sell high ...when things are high, sit on your cash ... when things are low spend your cash ...
With that kind of warchest seems like he could manipulate the market lower, short term at least, and pick up his favorite companies still. Sort of like what Soros did to the British Pound and other currencies to pocket billions.
Isn’t Granpa Warren a major shareholder in Bank of America? He can use their expertise and cash as well.
“Though in my case there’s a LOT less money involved, I’m in the same boat. Time to look at foreign investment?”
IF you want income, look at Royal Dutch Shell Class B shares ... been paying ~6% for decades with stable price.
Odd...
Several have great balance sheets and are undervalued:
BHGE
USG
PHM
RE: Sort of like what Soros did to the British Pound and other currencies to pocket billions.
I am an investor of Berkshire ( have been for years ) and this is one of my BEST investments.
Although I don’t agree with Buffet’s politics, I have not yet seen him act like the vulture Soros is. Buffet does not buy a company only to dump it quickly for short term or immediate gains. He does it because the company has a good business, provides useful products or services and has good long term value.
I would also say that he does not destroy a business. He wants to nurture it and see it do well.
Buy San Francisco.
Then push it into the bay as land-fill.
Make a land bridge to Angel’s Island.
Maybe someone can convince Buffett to pay all of his back taxes owed to the Federal Government.
RE: Maybe someone can convince Buffett to pay all of his back taxes owed to the Federal Government.
He’s waiting for Congress to pass a tax law to TAX HIM MORE ( just like his buddy Bill Gates ).
Please don’t misunderstand, I am not equating Buffett to Soros in any way.
Just suggesting, sort of tongue and cheek, that he use his resources to knock the stock or entire market temporarily down so he can pick up another crown jewel.
Congratulations on your foresight with BRK. I missed the boat on that unfortunately. Maybe it’s not too late?
Pardon my audacity, but how about creating a business and American jobs?
There is going to be far less than usual since the Obama-era was a disaster for entrepreneurs and fewer businesses were started or invested in.
Thanks SeekAndFind. Because of the current and foreseeable prospects for the US dollar, there's no currency play, and he's too much a stick in the mud to invest in hot stocks that he can't figure out how to value. He only came around to Apple because he took a ride in a minivan with a bunch of his grandkids, and they were all watching media or playing games on their iPhones. Netflix and the leading circuit makers are all a bit, uh, pricey. He'd be better off risking a very small percentage of his cash on buying the deeply depressed coal stocks (he'd have billions to spare), GE, and Ford.
Now is the time for him to be selling
Oh yes, uncle Warren is such an ethical person. He would never commit fraud on a grand scale like engaging in fraudulent mortgage security ratings:
http://www.mcclatchydc.com/news/politics-government/article24559855.html
He would never crash a market and then pick up assets at firesale prices:
He presents himself as the epitome of traditional investment, but his actions prove him the consummate insider. The difference between the oracle and Soros is that Soros destroys countries, while Buffett targets American families—converting homeowners to renters has proven extremely profitable. Prophecy is much easier when you are able to directly influence the market on a scale unimaginable to the regular (or ethical) investor.
Buffet’s been saying that for years
It is better to go long now in BRK than to have cash.
https://finance.yahoo.com/quote/brk-b
due to this https://www.nasdaq.com/articles/jp-morgan-says-recession-coming-as-us-consumers-falter-2019-10-11
BRK.A (never split, hugely expensive)
BRK.B (within reach of most investors)
They’ll need the cash when his bad investments finally burn to the ground.
Warren Buffett’s Charities Are Making Him Richer by Funding Shady Attacks on Berkshire Hathaway Competitors
https://pjmedia.com/news-and-politics/warren-buffetts-charities-are-making-him-richer-by-funding-shady-attacks-on-berkshire-hathaway-competitors/
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