Berkshire Hathaway has a massive cash pile that keeps growing, but Warren Buffett’s industrial and insurance conglomerate has yet to make a major acquisition to increase growth.
Berkshire on Saturday reported it has $128 billion in cash, up from $122 billion in the second quarter.
Berkshire Hathaway (BRKA) has been sluggish the market this year, and Buffett has said that he wants to make an “elephant” sized acquisition with the company’s mountain of cash. The issue is that the market rally has made any potential targets much more expensive, and Buffett has said he doesn’t want to overspend on deals.
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Berkshire’s operating profit increased to $7.9 billion, up from $6.9 billion a year earlier, boosted by gains across its holdings. The Omaha, Nebraska-based company’s performance is connected to its many subsidiaries including: GEICO, railroad Burlington Northern Santa Fe and consumer brands like Duracell, Dairy Queen and paint maker Benjamin Moore — as well as a massive investment portfolio.
Berkshire has yet to make a major acquisition, but the company has been taking steps to embrace more reasonably valued tech stocks in recent years. Berkshire Hathaway still owns large stakes in value stalwarts like Coke, (KO) Bank of America (BAC), Wells Fargo (CBEAX) and Kraft Heinz. (KHC)
The company’s biggest holding now is Apple (AAPL), and Berkshire even has a small stake in Amazon (AMZN).
Berkshire Hathaway also purchased $700 million of its own stock in the third quarter, an uptick from the $442 million it bought last quarter. The company purchased $1.7 billion of its own shares in the first quarter.
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The company did not allow stock buybacks. The board changed a rule last year to allow the company to begin purchasing back billions of dollars worth of stock, a practice that has been criticized by some analysts as inflating share prices.
Any ideas on what the acquisition might be? We look foward to seeing your comments.
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