Warren Buffett has enough firepower to do a $160 billion deal this year

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  • Warren Buffett’s firm Berkshire Hathaway is sitting on a record amount of cash.
  • UBS speculates that the company could make an acquisition exceeding $US160 billion this year, perhaps in the utilities sector.

Berkshire Hathaway has never had this much cash, so naturally people have wide-ranging ideas for how the Warren Buffett-led juggernaut might use it.

UBS, for one, thinks the company should make a splashy acquisition – one that could exceed a whopping $US160 billion. The bank arrives at that figure by factoring in the record $US109 billion of cash Berkshire has on hand, and combining it with the company’s strong free cash flow.

As for which industry Berkshire might pursue, UBS thinks utilities are a good bet. After all, the company’s energy unit made an unsuccessful $US9 billion offer for electricity provider Oncor last year, and might still be interested in the sector.

There is, however, one possible impediment, which is that equities are trading at historically high valuations as indexes keep surging to new records, says UBS. The firm notes that this could make some potential targets prohibitively expensive.

With that said, Berkshire’s own lofty valuation could prevent it from using its cash to buy back its own shares, argues UBS. That makes it even more likely that the firm will use their capital on something other than buybacks – like M&A. Stay tuned.

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