Sunday, January 23, 2022
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Pressure builds on Buffett

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Investor Warren Buffett could be pressured to buy back stock or consider a dividend if he doesn’t find a good use for Berkshire Hathaway’s $128 billion cash pile. “I think that investors are likely to be getting impatient here,” Edward Jones analyst Jim Shanahan said. Buffett hasn’t landed a major acquisition since 2016, when Berkshire bought Precision Castparts. Shanahan estimates that Berkshire has invested roughly $45 billion in smaller acquisitions, stock purchases and buybacks in the past three years.

Berkshire’s businesses generate about $2 billion in cash a month, so its money pile keeps growing. In recent years, Berkshire has repurchased only modest amounts of stock, and it hasn’t paid a dividend because Buffett believes he generates better returns by reinvesting Berkshire’s cash. Buffett is likely to brush off any fresh investor demands to spend on dividends and buybacks, as he continues waiting for attractive acquisition targets, said Andy Kilpatrick, who wrote “Of Permanent Value: The Story of Warren Buffett.” “There is a little pressure on him, but I think he can withstand it,” Kilpatrick said.

Berkshire Hathaway has several investments in Fort Worth area businesses, including Acme, Justin, TTI, Mouser and BNSF. 

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