Friday, April 23, 2021
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Buffett’s Billions

Investor Warren Buffett is having trouble finding something to buy at a reasonable price, so more than $122 billion cash has piled up at Berkshire Hathaway. The amount of cash and short-term investments Buffett is sitting on has grown steadily because Berkshire’s businesses and investments generate roughly $2 billion a month, and the conglomerate hasn’t made a major acquisition in several years. Berkshire’s last major acquisition came in early 2016, when it bought aviation parts maker Precision Castparts for $32.36 billion.

Since then Buffett hasn’t found another deal that meets his criteria: large, proven companies that he understands with an enduring competitive advantage selling at a reasonable price. Part of why it has been difficult to find deals is that many other prospective buyers, including hedge funds, are bidding on potential acquisitions and driving up prices. Buffett has said he will always keep at least $20 billion on hand at all times in case Berkshire’s insurance companies have to pay a big claim or some other need arises, so not all of the company’s cash is available for acquisitions.

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