Buffett is Playing Catch Up: DIRECTV (DTV) and More

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Adding a 20% premium and backing out Berkshire’s current stake, this acquisition would take approximately $13 billion from Berkshire’s cash pile. Using the operating income from the chart below, that would equate to around 12 times operating income. With Berkshire’s current war chest, it could acquire both DirecTV and DaVita, and still have some cash to spare.

DVA Operating Income Quarterly data by YCharts

Berkshire Hathaway will continue to produce gobs of cash for years to come. If Buffett has his way, that cash will be used to purchase great companies at reasonable prices. This process has greatly rewarded shareholders in the past and will continue to reward them well into the future. DirecTV and DaVita appear to be great companies and may one day join the family of wholly-owned subsidiaries of Berkshire Hathaway. Either way, Buffett will continue to stalk his prey with a fully-loaded elephant gun, biding his time to take down a real trophy.

The article Buffet is Playing Catch Up originally appeared on Fool.com and is written by Kyle Campbell.

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