Imagine logging into your bank account and seeing you have more money than you thought. Now imagine your balance just keeps going up Up UP while you just keep doing you.
That’s what Berkshire Hathaway, the conglomerate run by “Oracle Of Omaha” Warren Buffett is experiencing right now as their bank account has swelled to a record $167.6 billion dollars in cash for Q4! In fact that’s an increase of $10.4 billion dollars in cash more than only 3 months ago when they reported their Q3 results.
Think about that for a minute.
Berkshire Hathaway is throwing off $10 billion dollars a quarter in free cash flow, and for some reason they aren’t spending it.
Some have speculated that Berkshire Hathaway has been saving up for a big acquisition, but quarter-after-quarter Warren Buffett continues to struggle to find many of the big-ticket deals that would be a fit for his Berkshire Hathaway.
Instead he’s focused on returning some capital to shareholders in the form of quarterly dividends, which is nice and all, but it isn’t why investors have clamored into his company’s stock.
Speaking of which, Berkshire Hathaway’s Class B stock is up 14% in the last year, so investors are clearly happy with the company’s performance.
All of this growth and free cash flow has led Berkshire Hathaway’s valuation to soar to a nearly $1 trillion dollar market cap. As it stands right now, Berkshire Hathaway is worth $901.08 billion dollars and growing.
Berkshire Hathaway may be happy to just sit on all their cash instead of running out and acquiring a company. With interest rates at 5.4% right now, Berkshire Hathaway could earn an estimated $8.5 billion per year from its cash in the bank.
I’m just going to throw it out there and suggest Berkshire Hathaway should and could acquire Disney, which has a market cap of $199.02 billion dollars; which with $167.6 billion dollars in the bank Berkshire Hathaway could nearly afford to acquire in an all cash offer.
I think Disney aligns with Warren Buffett investment thesis, and with all the struggles Disney has been facing taking the company private right now would allow them to strategically realign the company and its many divisions. I think that could give them the cover they need to spin off ESPN and ABC freeing up cash flow to further invest in their streaming platforms Hulu and Disney+.
Again, that’s my thoughts for what it’s worth, but if Warren Buffett’s Berkshire Hathaway does acquire Disney just remember where you heard it first!
