Following the sale of nearly half their stake in Apple, Warren Buffett’s Berkshire Hathaway is now sitting on approximately $277 Billion dollars!
In Q2 Berkshire Hathaway sold both Apple and Bank of America stock, for a total of $75 billion in sales for the quarter.
Berkshire Hathaway was sitting on $189 billion at the end of Q1, but now has a record $277 billion dollars in the bank.
Imagine seeing that number when you log into your bank account!
Berkshire Hathaway is still throwing off roughly $10 billion dollars a quarter in free cash flow. Combine that with anticipated future equity sales, and Berkshire Hathaway could find itself with close to $300 billion dollars in their bank account by the end of 2024.
And yet, for some reason they aren’t spending it.
I’ve previously written about Berkshire Hathaway’s giant cash horde, but I honestly thought by now they would have spent some of it, and they have a little. They continue to repurchase stock each quarter, with a recent filing that they have repurchased “$345 million worth of its own stock in the second quarter, significantly lower than the $2 billion repurchased in each of the prior two quarters.” according to an article on CNBC.
So all indications to me are they’re freeing up cash from the sale of equity holdings, they’ve cut back on the repurchase of their own stock, and they continue to build up their bank holding by saving the roughly $10 billion dollars in free cash flow they generate each quarter.
Some have speculated that Berkshire Hathaway has been saving up for a big acquisition, but quarter-after-quarter Warren Buffett continues to say that they haven’t found an acquisition target that fits their investment criteria due to the high prices of equities.
In Berkshire Hathaway’s annual meeting in May Warren Buffet said he is willing to deploy capital, but that high prices still make him pause.
“We’d love to spend it, but we won’t spend it unless we think [a business is] doing something that has very little risk and can make us a lot of money.” Warren Buffet shared.
With Berkshire Hathaway’s market cap standing close to $1 trillion dollar market cap, or $930.27 billion to be precise, that is up $29.19 billion dollars from $901.08 billion dollars they were valued at the end of Q1.
Berkshire Hathaway may be happy to just sit on all their cash instead of running out and acquiring a company. With interest rates at 5.5% right now, Berkshire Hathaway could earn an estimated $15.24 billion dollars this year from just the cash it holds in the bank.
I’ve said this before, and I’m going to say it again: Berkshire Hathaway needs to put this capital to work and make a big acquisition.
But who should they buy?
Disney!
Hear me out.
Disney has a market cap of $155.68 billion dollars, which is down from a market cap of $199.02 billion dollars at the end of Q1. bank Berkshire Hathaway could literally afford to acquire Disney in an all cash offer, even after offering to pay a 25% premium with an offer of $194.6 billion dollars.
Wall Street would love this deal, and I believe investors would be receptive because it would give Disney a safe home with a company that has strong values and is known for being a good steward of the companies in their portfolio.
Berkshire Hathaway taking Disney private right now would allow them to continue to invest in their theme parks and cruise fleet, while strategically building out their streaming services of Disney+, Hulu, and ESPN.
I also really think Disney should revisit the idea of spinning off ESPN and ABC, which would free up further cash flow for investments in the parts of their business that are seeing slower growth rates.
As always, WTF do I know. These are my own thoughts, but if Warren Buffett’s Berkshire Hathaway does acquire Disney just remember where you heard it first!
Warren Buffett raises Berkshire cash level to record $277 billion