Sitting on $100 billion but nowhere to spend Buffett has been a little annoyed lately
Source: Interface News
Berkshire Hathaway said in its report released on Friday that the amount of cash held by the company at the end of the second quarter was as high as $99.7 billion. However, this may not be what the company chairman Buffett hopes to see.
Although this figure shows that the companies that Buffett acquired during these years made amazing money, holding large sums of cash has also become a burden. Because Berkshire doesn't pay dividends and rarely buy back shares, Buffett must find another way to invest with this money.
According to Bloomberg, David Rolfe, chief investment officer at investment firm Wedgewood Partners, said: “It's good to be able to use that money, but Buffett is willing to hold very few companies.†Wedgewood Partners currently manages about $6 billion in funding, And holds Berkshire's stock.
At the Berkshire annual meeting in May, Buffett, 86, also mentioned the company’s mountain of cash. He said that mergers and acquisitions have not been implemented for some time, and that they should not hold so much cash for a long period of time without generating any revenue. The funds also include some cash-like securities, such as national debt.
Recently, Buffett’s investment has not been much. Berkshire started buying Apple’s stock from the first quarter of last year and increased it significantly later.
Then, in June of this year, the company had two smaller equity investments, one was a real estate investment trust company and the other was the troubled Canadian home mortgage company Home Capital Group Inc.
In addition, Berkshire’s public utility last month reached an agreement to acquire Texas' largest power company for about $9 billion. However, the above agreement has not yet been implemented.
Buffett Visual China for the map
In May this year, Buffett said in an interview: "I hate cash." He also said that he hopes to acquire a large company, but has not yet found any goals.
"I mean, we are investing," he said. "But before we find the right investment opportunity, it will be waiting. But now the interest rate is so low that we can hardly buy anything, because other people are also Buy it with a loan, and the loan is very cheap."
"If we use equity capital to compete with those opponents that only have a small amount of equity but a lot of debt, we will be at a disadvantage."
Buffett also said that he had thought that Berkshire had done more than 90 billion U.S. dollars to do well, but later saw Apple's cash reserves at the end of the second fiscal quarter reached as high as 256.8 billion U.S. dollars.
"I'm embarrassed," Buffett said with a smile. "I thought I was doing well, and then I saw their balance sheet."
"But on the other hand, our cash is in the United States." Apple has placed most of its cash abroad for tax reasons.
The financial report released last Friday showed that as of the second quarter of June 30, Berkshire’s net profit was US$4.26 billion, a decrease of approximately 15% from the same period of last year. The decline was mainly due to the loss of insurance business losses, but other businesses including manufacturing, services and retail sales achieved significant growth.
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