Warren Buffett’s Berkshire Hathaway Inc. (BRK.A) Will Wait for a Fat Pitch for Its $50 Bln Cash

Berkshire Hathaway Inc. (NYSE:BRK.A) reported a record breaking second quarter on Friday as its profits jumped by as much as 41% indicating an impressive track record of the company’s investments. Berkshire Hathaway Inc. (NYSE:BRK.A)’s net earnings grew to $3.89 billion in the second quarter of 2014, from $2.76 billion a year earlier. However, a figure that gripped the Wall Street’s eyes is the company’s big amount of cash that surpassed the level of $50 billion, an all time high on an absolute basis. Bloomberg discussed with experts as how the company will deal with its huge cash pile.

Berkshire Hathaway

“It is really just about 10% of Berkshire Hathaway Inc. (NYSE:BRK.A)’s assets, which is actually down from a decade ago. Because  what Warren Buffett has been doing is that he has been buying railroads, he has been buying electric utilities. That has really expanded the size of the balance sheet, but it has also expanded the earnings power of Berkshire Hathaway Inc. (NYSE:BRK.A). So what you are seeing is every quarter, Berkshire Hathaway Inc. (NYSE:BRK.A) is just generating a lot of money and Buffet, as we all know, sort of waits for the fat pitch. He really wants a good investment,” said Noah Buhayar.

So far, Buffet has not made any comment about how the cash would be utilized in investing. However, when it comes to a potential transaction, Buffet has the courage to decide when to say ‘No.’

“Clearly, he has no problem saying no because so many people are trying to get him interested in investments,” added Buhayar.

Meanwhile, Bank of America Merrill Lynch Portfolio Strategy’s CIO, Mary Ann Bartels, sees the M&A cycles as fat pitches. ”[...] We are very bullish on the M&A cycle. It has picked up, the number of deals is very high, but if look at the dollar volume, then we are still way below 2007,” which is a very positive thing in her opinion. But, retail is nowhere in the list, considers Davidowitz & Associates Chairman and founder, Howard Davidowitz, as he said,” he hates retail. It is 2% of the business. He says it’s in trouble.”

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