Warren Buffett's Sitting $50 Billion Waiting For The Right 'Fat Pitch' Company To Come Along
According to Bloomberg News, Warren Buffett's Berkshire Hathaway Inc., "rose past $50 billion at the end of June", which is the first time "it finished a quarter above that level since he became chairman and chief executive officer more than four decades ago."
$50 billion is more than twice the amount that Buffett likes to "keep on hand should his insurance businesses have to pay unusually large claims".
But "the guy's just not going to spend the cash to spend it", according to David Rolfe, Wedgewood Partners' chief investment officer who was quoted in the Bloomberg article.
Berkshire Hathaway's Q2 profits soared 41% to $6.4 billion ($3,889 per Class A share) - a record. Additionally, Berkshire Hathaway also operates businesses such as Geico, which add even more to earnings.
Typically, Warren Buffett's investment strategy is to wait for the fat pitch. For those unfamiliar with the term, a "fat-pitch" is the "opportunity to buy a company at a price promising favorable returns". However, Berkshire Hathaway is now so large that few companies are "big enough to merit Buffett's attention".
According to the article, some of that $50 billion is going to Berkshire's capital-intensive units including electric utilities, natural-gas pipelines and the railroad.
But that's not going to use up all of the cash - so it will be interesting to see what Buffett does with the rest.
In recent years, Buffett has gotten involved with major companies. In 2013, Buffett and 3G Capital bought HJ Heinz Co and took it private. And in 2011 he invested in IBM - despite the fact that he generally prefers to stay out of tech companies.
Source: Bloomberg News