Perhaps the most important question for Berkshire is how are they going to spend all that cash?
Berkshire’s cash pile keeps growing and stood around $116 billion at year end. The number is expected to fall slightly, but stay relatively high, when Berkshire reports its first-quarter earnings shortly.
Mr. Buffett acknowledged in his annual letter earlier this year that the pressure is on for Berkshire to make a huge acquisition soon. Prices for businesses were too high for his taste in 2017, he said, but “our smiles will broaden when we have redeployed Berkshire’s excess funds into more productive assets.”
As Berkshire’s subsidiaries continue to rake in cash, questions about returning cash to shareholders will continue to come up either for Mr. Buffett, or for his eventual successor.
Mr. Buffett has shot down the idea that Berkshire should pay a dividend nearly every year, saying that he can make better use of Berkshire’s cash by investing it. And shareholders voted down a proposal in 2014 asking the board of directors to consider paying one. But in recent years, he’s suggested that a time may come when Berkshire might run out of ways to profitably deploy its cash hoard.
If not a dividend, perhaps a more aggressive buyback strategy? Right now, Berkshire has an open-ended repurchase program where it says it will consider buying up its own shares if they trade below 120% of book value. Mr. Buffett said on CNBC in February that the threshold could rise in the future.
Source link : https://www.wsj.com/livecoverage/berkshire-hathaway-2018-annual-meeting-analysis
Publish date : 2018-05-05 12:57:07