Berkshire Hathaway has a bigger pile of cash on hand than ever before, but nowhere to spend it.
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According to the company’s quarterly earnings report on Saturday, Warren Buffett’s sprawling conglomerate has a staggering $128.1 billion in cash and equivalents — a record amount — despite investing $10 billion in Occidental Petroleum Corp. in exchange for 100,000 shares of stock.
Despite holding so much cash — "far beyond" the level that Buffett and Vice Chairman Charlie Munger prefer — the company has struggled to make any major acquisitions since 2016, citing asking prices that are too high. Instead, the company has repurchased about $700 million of its own shares, something Buffett previously shunned.
In May, Buffett told FOX Business’ Liz Claman the company’s cash pile expands by about $100 million per business day. At the time, he said he was searching the world for new investment opportunities.
“In terms of size, there are probably a dozen countries in the world that should have some companies that we would be interested in,” he said at the time.
Last year, in his annual letter to shareholders, Buffett blamed the prices on a buying frenzy driven in large part by CEOs who are cheered on by their boards. Once CEOs have a deal and asking price in mind, it’s difficult to sway their opinions, he said, comparing them to oversexed teens.
“Why the purchasing frenzy?” Buffett wrote in 2018. “In part, it’s because the CEO job self-selects for 'can-do' types. If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it’s a bit like telling your ripening teenager to be sure to have a normal sex life.”