Too Much of a Good Thing
A bet on Berkshire is a bet on Buffett, the world’s greatest stock picker. You can’t fault the logic, but there’s only one problem: He seems to have gone off it!
What would you do with $128 billion in cash? You’d probably invest some of it, right? Well, not if you’re the best investor ever, apparently! On Saturday, Warren Buffett’s holding company, Berkshire Hathaway, disappointed investors by going another quarter without any major investments being made. He’s hoarding cash, and the reason why is fundamental.
Warren Buffett is a devout follower of the value investing doctrine, as well as an influential missionary for it. He wants to know what a business is worth so that he can buy it for less, and a business is worth the money it can make him as an investor! You’ll never catch him paying more than fair value for a stock, and that’s why as he stands back from markets, financial pundits are afraid he knows something we don’t!
That it’s all going to be okay, hopefully. It’s worth noting that $128 billion is quite a large sum of money, and it doesn’t fit easily into most market instruments. Warren Buffett has promised to move the needle eventually with another “elephant” acquisition, but he’ll have to be patient. For now, the best investment might be in himself!
Berkshire Hathaway bought $1.7 billion of its own stock this quarter, which is a self-endorsement of its big stakes in Apple, Bank of America, Coca-Cola, and American Express. We can only assume that the unmoving stock price of Berkshire is making it a great value play for the Oracle. Time will tell!