Latest news with #US347.7
The Age
05-05-2025
- Business
- The Age
Warren Buffett has left his successor with a $540 billion pile of cash and a big problem
Not surprisingly, for more than two years, instead of using the torrents of cash his group has generated to buy expensive companies or shares, Buffett has been building a stockpile of cash. Berkshire Hathaway now has a hoard of $US347.7 billion (about $540 billion). For Abel, how and when he deploys that cash will represent the major and reputation-defining challenge of his new role. Abel is an operational guy, brought into Berkshire Hathaway when it acquired a stake in MidAmerican Energy in 1999. He built the energy business into a key pillar of the group's operating assets and now runs all Berkshire Hathaway's non-insurance operations, a portfolio of more than 180 operating companies that generated $US47.4 billion of Berkshire Hathaway's $US89.7 billion of first-quarter revenues. He's a manager, not an investor. Todd Combs and Ted Weschler are the executives responsible for identifying investment targets. Once he replaces Buffett, however, it is Abel who will have to make the big calls. Buffett has been a contrarian investor, often sitting on the markets' sidelines for considerable periods while waiting for opportunities – the 'straw hats in winter' or counter-cyclical approach that hardcore value investors pursue. Loading 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful,' Buffett has said to explain his philosophy. In 2008, during the global financial crisis, that strategy was vindicated. Berkshire Hathaway stepped in during the worst of the crisis to buy cheap stakes in companies like Goldman Sachs, General Electric and Dow Chemical, driving very hard bargains in exchange for the calming influence its money and Buffett's reputation provided. Those sorts of opportunities don't, however, come that often. Since the crisis, Buffett has been relatively quiet. Berkshire Hathaway's level of out-performance of the market has shrunk and its store of undeployed cash has soared, signalling that Buffett believes there isn't value in the market for either companies or shares in the current environment. His major play in recent years, unusually for a group largely focused on the US, has been the $US23.5 billion the group has invested in five of Japan's biggest trading houses. Abel's challenge will be to find value and the moment to use that cash on deals that are large enough to move the dial in what is now a $US1.2 trillion conglomerate. If Donald Trump's trade policies – his tariffs – were to push the US economy into recession, which is possible, that moment might arise. There is a lot of leverage in the US system. During the near meltdown in the US bond market earlier this year after Trump made his 'Liberation Day' announcement of reciprocal tariffs, hedge funds were scrambling to exit leveraged trades and the market for leveraged loans froze. There are a lot of highly-leveraged hedge funds and private equity firms out there that would be stressed if economic conditions deteriorated markedly, or interest rates were to rise – or both, if Trump induces, as some fear, a stagflationary recession. 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.' Warren Buffett Buffett seems confident that those sorts of distressed asset sales will eventuate. 'We will be bombarded with offerings that we'll be glad we had the cash for,' he said at the weekend. That could release a lot of the kinds of hard assets that private equity targets and Buffett have always liked: companies with good management, strong franchises, protective 'moats' and solid cashflows and earnings. The big long-term holdings within Berkshire Hathaway's investment portfolio are companies like Amex, Coca-Cola, Bank of America and, while he was late to that party, Apple, but the core portfolio of operating companies is centred on insurance, utilities and energy, railroads, and a collection of manufacturers and retailers. Whether those sorts of companies that have generally performed well in the past 60 years will generate similar performance in the future is an open question. Artificial intelligence is expected to transform companies and industries in ways that are difficult to predict. Buffett's philosophy was to avoid companies and technologies he didn't understand, so he didn't invest in companies like Google, Amazon, Meta, Microsoft and only started investing in Apple – the star of the portfolio – in early 2016, nine years after Steve Jobs launched the first iPhone and transformed a company now worth more than $US3 trillion. Abel will have to navigate the implications of AI for the post-Buffett investment environment if he is to continue Berkshire Hathaway's history of significant out-performance. Buffett could get away with a year or two of passivity or the odd poor investment; Abel won't be afforded that same level of shareholders' trust. There will be pressure on him to do something big with Berkshire Hathaway's cash – big enough to have an impact on the group's returns – and there won't be tolerance for any mistakes. In many respects, Buffett has handed his successor a poisoned chalice. No one could deliver the Buffett package of extraordinary returns wrapped around his unique style and charisma – a personality cult that developed over decades – in an investing environment so different, and vastly more competitive, than when Buffett was mopping up hard assets at discounts to their book values, let alone their market values. Abel may have to chart a new and different course for Berkshire Hathaway, as anyone who succeeded the man who created one of the world's biggest and most influential investment firms would have had to do. Loading Buffett, his decades of investment wisdom, and his ability to see value where no one else had are irreplaceable. There is now a significant question mark over the eventual fate of the sprawling investment conglomerate he created that Abel, even while the counsel of the 94-year-old Buffett is still available, will find it very difficult to dispel.
The Age
05-05-2025
- Business
- The Age
5,500,000% return: How Warren Buffett became a Wall Street legend
Not surprisingly, for more than two years, instead of using the torrents of cash his group has generated to buy expensive companies or shares Buffett has been building a stockpile of cash. Berkshire Hathaway now has a hoard of $US347.7 billion (about $540 billion). For Abel, how and when he deploys that cash will represent the major and reputation-defining challenge of his new role. Abel is an operational guy, brought into Berkshire Hathaway when it acquired a stake in MidAmerican Energy in 1999. He built the energy business into a key pillar of the group's operating assets and now runs all Berkshire Hathaway's non-insurance operations, a portfolio of more than 180 operating companies that generated $US47.4 billion of Berkshire Hathaway's $US89.7 billion of first-quarter revenues. He's a manager, not an investor, with Todd Combs and Ted Weschler, the executives responsible for identifying targets for investment. Once he replaces Buffett, however, it is Abel who will have to make the big calls. Buffett has been a contrarian investor, often sitting on the markets' sidelines for considerable periods while waiting for opportunities – the 'straw hats in winter,' or counter-cyclical, approach that hardcore value investors pursue. Loading 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful,' Buffett has said to explain his philosophy. In 2008, during the global financial crisis, that strategy was vindicated. Berkshire Hathaway stepped in during the worst of the crisis to buy cheap stakes in companies like Goldman Sachs, General Electric and Dow Chemical, driving very hard bargains in exchange for the calming influence its money and Buffett's reputation provided. Those sorts of opportunities don't, however, come that often. Since the crisis, Buffett has been relatively quiet, Berkshire Hathaway's level of out-performance of the market has shrunk and its store of undeployed cash has soared, signalling that Buffett believes there isn't value in the market for either companies or shares in the current environment. His major play in recent years, unusually for a group largely focused on the US, has been the $US23.5 billion the group has invested in five of Japan's biggest trading houses. Abel's challenge will be to find value and the moment to use that cash on deals that are large enough to move the dial in what is now a $US1.2 trillion conglomerate. If Donald Trump's trade policies – his tariffs – were to push the US economy into recession, which is possible, that moment might arise. There is a lot of leverage in the US system. During the near meltdown in the US bond market earlier this year after Trump made his 'Liberation Day' announcement of reciprocal tariffs, hedge funds were scrambling to exit leveraged trades and the market for leveraged loans froze. There are a lot of highly-leveraged hedge funds and private equity firms out there that would be stressed if economic conditions deteriorated markedly, or interest rates were to rise – or both, if Trump induces, as some fear, a stagflationary recession. 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.' Warren Buffett Buffett seems confident that those sorts of distressed asset sales will eventuate. 'We will be bombarded with offerings that we'll be glad we had the cash for,' he said at the weekend. That could release a lot of the kinds of hard assets that private equity targets and Buffett has always liked: companies with good management, strong franchises, protective 'moats' and solid cashflows and earnings. The big long-term holdings within Berkshire Hathaway's investment portfolio are companies like Amex, Coca-Cola, Bank of America and, while he was late to that party, Apple, but the core portfolio of operating companies is centred on insurance, utilities and energy, railroads, and a collection of manufacturers and retailers. Whether those sorts of companies that have generally performed well in the past 60 years will generate similar performance in future is an open question. Artificial intelligence is expected to transform companies and industries in ways that are difficult to predict. Buffett's philosophy was to avoid companies and technologies he didn't understand, so he didn't invest in companies like Google, Amazon, Meta, Microsoft and only started investing in Apple – the star of the portfolio – in early 2016, nine years after Steve Jobs launched the first iPhone and transformed a company now worth more than $US3 trillion. Abel will have to navigate the implications of AI for the post-Buffett investment environment if he is to continue Berkshire Hathaway's history of significant out-performance. Buffett could get away with a year or two of passivity or the odd poor investment; Abel won't be afforded that same level of shareholders' trust. There will be pressure on him to do something big with Berkshire Hathaway's cash – big enough to have an impact on the group's returns – and there won't be tolerance for any mistakes when he does. In many respects, Buffett has handed his successor a poisoned chalice. No-one could deliver the Buffett package of extraordinary returns wrapped around his unique style and charisma – a personality cult that developed over decades – in an investing environment so different, and vastly more competitive, than when Buffett was mopping up hard assets at discounts to their book values, let alone their market values. Abel may have to chart a new and different course for Berkshire Hathaway, as anyone who succeeded the man who created one of the world's biggest and most influential investment firms would have had to do. Loading Buffett, his decades of investment wisdom and his ability to see value where no-one else had, is, however, irreplaceable. There is now a significant question mark over the eventual fate of the sprawling investment conglomerate he created that Abel, even while the counsel of the 94-year-old Buffett is still available, will find it very difficult to dispel.
Sydney Morning Herald
05-05-2025
- Business
- Sydney Morning Herald
5,500,000% return: How Warren Buffett became a Wall Street legend
Not surprisingly, for more than two years, instead of using the torrents of cash his group has generated to buy expensive companies or shares Buffett has been building a stockpile of cash. Berkshire Hathaway now has a hoard of $US347.7 billion (about $540 billion). For Abel, how and when he deploys that cash will represent the major and reputation-defining challenge of his new role. Abel is an operational guy, brought into Berkshire Hathaway when it acquired a stake in MidAmerican Energy in 1999. He built the energy business into a key pillar of the group's operating assets and now runs all Berkshire Hathaway's non-insurance operations, a portfolio of more than 180 operating companies that generated $US47.4 billion of Berkshire Hathaway's $US89.7 billion of first-quarter revenues. He's a manager, not an investor, with Todd Combs and Ted Weschler, the executives responsible for identifying targets for investment. Once he replaces Buffett, however, it is Abel who will have to make the big calls. Buffett has been a contrarian investor, often sitting on the markets' sidelines for considerable periods while waiting for opportunities – the 'straw hats in winter,' or counter-cyclical, approach that hardcore value investors pursue. Loading 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful,' Buffett has said to explain his philosophy. In 2008, during the global financial crisis, that strategy was vindicated. Berkshire Hathaway stepped in during the worst of the crisis to buy cheap stakes in companies like Goldman Sachs, General Electric and Dow Chemical, driving very hard bargains in exchange for the calming influence its money and Buffett's reputation provided. Those sorts of opportunities don't, however, come that often. Since the crisis, Buffett has been relatively quiet, Berkshire Hathaway's level of out-performance of the market has shrunk and its store of undeployed cash has soared, signalling that Buffett believes there isn't value in the market for either companies or shares in the current environment. His major play in recent years, unusually for a group largely focused on the US, has been the $US23.5 billion the group has invested in five of Japan's biggest trading houses. Abel's challenge will be to find value and the moment to use that cash on deals that are large enough to move the dial in what is now a $US1.2 trillion conglomerate. If Donald Trump's trade policies – his tariffs – were to push the US economy into recession, which is possible, that moment might arise. There is a lot of leverage in the US system. During the near meltdown in the US bond market earlier this year after Trump made his 'Liberation Day' announcement of reciprocal tariffs, hedge funds were scrambling to exit leveraged trades and the market for leveraged loans froze. There are a lot of highly-leveraged hedge funds and private equity firms out there that would be stressed if economic conditions deteriorated markedly, or interest rates were to rise – or both, if Trump induces, as some fear, a stagflationary recession. 'We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.' Warren Buffett Buffett seems confident that those sorts of distressed asset sales will eventuate. 'We will be bombarded with offerings that we'll be glad we had the cash for,' he said at the weekend. That could release a lot of the kinds of hard assets that private equity targets and Buffett has always liked: companies with good management, strong franchises, protective 'moats' and solid cashflows and earnings. The big long-term holdings within Berkshire Hathaway's investment portfolio are companies like Amex, Coca-Cola, Bank of America and, while he was late to that party, Apple, but the core portfolio of operating companies is centred on insurance, utilities and energy, railroads, and a collection of manufacturers and retailers. Whether those sorts of companies that have generally performed well in the past 60 years will generate similar performance in future is an open question. Artificial intelligence is expected to transform companies and industries in ways that are difficult to predict. Buffett's philosophy was to avoid companies and technologies he didn't understand, so he didn't invest in companies like Google, Amazon, Meta, Microsoft and only started investing in Apple – the star of the portfolio – in early 2016, nine years after Steve Jobs launched the first iPhone and transformed a company now worth more than $US3 trillion. Abel will have to navigate the implications of AI for the post-Buffett investment environment if he is to continue Berkshire Hathaway's history of significant out-performance. Buffett could get away with a year or two of passivity or the odd poor investment; Abel won't be afforded that same level of shareholders' trust. There will be pressure on him to do something big with Berkshire Hathaway's cash – big enough to have an impact on the group's returns – and there won't be tolerance for any mistakes when he does. In many respects, Buffett has handed his successor a poisoned chalice. No-one could deliver the Buffett package of extraordinary returns wrapped around his unique style and charisma – a personality cult that developed over decades – in an investing environment so different, and vastly more competitive, than when Buffett was mopping up hard assets at discounts to their book values, let alone their market values. Abel may have to chart a new and different course for Berkshire Hathaway, as anyone who succeeded the man who created one of the world's biggest and most influential investment firms would have had to do. Loading Buffett, his decades of investment wisdom and his ability to see value where no-one else had, is, however, irreplaceable. There is now a significant question mark over the eventual fate of the sprawling investment conglomerate he created that Abel, even while the counsel of the 94-year-old Buffett is still available, will find it very difficult to dispel.
The Age
03-05-2025
- Business
- The Age
Warren Buffett shocks shareholders by announcing his intention to retire
Earlier, Buffett warned about the dire global consequences of US President Donald Trump's tariffs while telling the thousands of investors gathered at his annual meeting that 'trade should not be a weapon' but 'there's no question that trade can be an act of war.' Buffett said Trump's trade policies have raised the risk of global instability by angering the rest of the world. 'It's a big mistake in my view when you have 7.5 billion people who don't like you very well, and you have 300 million who are crowing about how they have done,' Buffett said as he addressed the topic on everyone's mind at the start of the Berkshire Hathaway shareholders meeting. While Buffett said it is best for trade to be balanced between countries, he doesn't think Trump is going about it the right way with his widespread tariffs. He said the world will be safer if more countries are prosperous. 'We should be looking to trade with the rest of the world. We should do what we do best and they should do what they do best,' he said. America has been going through revolutionary changes ever since its birth and the promise of equality for all, which wasn't fulfilled until years later, Buffett said. But nothing that is going on today has changed his long-term optimism about the country. 'If I were being born today, I would just keep negotiating in the womb until they said, 'You could be in the United States,'' Buffett said. Market turmoil doesn't create big opportunities Buffett said he just doesn't see many attractively priced investments that he understands these days, so Berkshire is sitting on $US347.7 billion in cash, but he predicted that one day Berkshire will be 'bombarded with opportunities that we will be glad we have the cash for.' Buffett said the recent turmoil in the markets that generated headlines after Trump's tariff announcement last month 'is really nothing.' He dismissed the recent drop in the market because he's seen three periods in the last 60 years of managing Berkshire when his company's stock was halved. He cited when the Dow Jones industrial average went from 240 on the day he was born in 1930 down to 41 during the Great Depression as a truly significant drop in the markets. Currently the Dow Jones Industrial Average sits at $US41,317.43. Loading 'This has not been a dramatic bear market or anything of the sort,' he said. Buffett said he hasn't bought back any of Berkshire's shares this year either because they don't seem to be a bargain either. Investor Chris Bloomstran, who is president of Semper Augustus Investments Group, told the Gabelli investment conference Friday that a financial crisis might be the best thing for Berkshire because it would create opportunities to invest at attractive prices.
Sydney Morning Herald
03-05-2025
- Business
- Sydney Morning Herald
Warren Buffett shocks shareholders by announcing his intention to retire
Earlier, Buffett warned about the dire global consequences of US President Donald Trump's tariffs while telling the thousands of investors gathered at his annual meeting that 'trade should not be a weapon' but 'there's no question that trade can be an act of war.' Buffett said Trump's trade policies have raised the risk of global instability by angering the rest of the world. 'It's a big mistake in my view when you have 7.5 billion people who don't like you very well, and you have 300 million who are crowing about how they have done,' Buffett said as he addressed the topic on everyone's mind at the start of the Berkshire Hathaway shareholders meeting. While Buffett said it is best for trade to be balanced between countries, he doesn't think Trump is going about it the right way with his widespread tariffs. He said the world will be safer if more countries are prosperous. 'We should be looking to trade with the rest of the world. We should do what we do best and they should do what they do best,' he said. America has been going through revolutionary changes ever since its birth and the promise of equality for all, which wasn't fulfilled until years later, Buffett said. But nothing that is going on today has changed his long-term optimism about the country. 'If I were being born today, I would just keep negotiating in the womb until they said, 'You could be in the United States,'' Buffett said. Market turmoil doesn't create big opportunities Buffett said he just doesn't see many attractively priced investments that he understands these days, so Berkshire is sitting on $US347.7 billion in cash, but he predicted that one day Berkshire will be 'bombarded with opportunities that we will be glad we have the cash for.' Buffett said the recent turmoil in the markets that generated headlines after Trump's tariff announcement last month 'is really nothing.' He dismissed the recent drop in the market because he's seen three periods in the last 60 years of managing Berkshire when his company's stock was halved. He cited when the Dow Jones industrial average went from 240 on the day he was born in 1930 down to 41 during the Great Depression as a truly significant drop in the markets. Currently the Dow Jones Industrial Average sits at $US41,317.43. Loading 'This has not been a dramatic bear market or anything of the sort,' he said. Buffett said he hasn't bought back any of Berkshire's shares this year either because they don't seem to be a bargain either. Investor Chris Bloomstran, who is president of Semper Augustus Investments Group, told the Gabelli investment conference Friday that a financial crisis might be the best thing for Berkshire because it would create opportunities to invest at attractive prices.
