Traditionally, Warren Buffett likes to have $US20 billion on hand to invest for “hunting elephants” at Berkshire Hathaway, but large acquisitions have been so few and far between in the last year that Berkshire has $US40 billion on hand right now,
It’s hard not to feel for the firm.
And according to Barclays, this problem isn’t going away. The bank estimates that Berkshire will post a profit of $US4.3 billion when it announces its Q3 earnings tomorrow.
At the end of March, Berkshire had $US49.1 billion cash on hand — that’s even after spending $US12.3 billion to buy Heinz.
Barclays estimates that Berkshire had $US34.7 billion at the end of June, and this month Mars Inc. paid off a $US4.4 billion loan Berkshire made to it in 2008.
So that’s where it all comes from. It’s also interesting to note (as Bloomberg does) that the $US20 billion Berkshire has on hand for safe keeping/rainy days/that oh-hell-lets-just-buy-a-Fortune 500-company kind of shopping is all in Treasuries. As interests rates are low, it hasn’t really been going to work for them.
But, that’s not the point. It’s there to help Buffett sleep at night.