Poor Warren Buffet has a problem

Good day all. It seems that Warren Buffet has a problem. The company he runs, Berkshire Hathaway Inc. is sitting on almost $100 billion dollars in cash.

Buffet’s company is basically a conglomerate that has other companies inside it. Buffet has managed to buy many profitably companies which is why, for him anyway, it looks like money is growing on trees. Here are some of the details from Bloomberg Markets:

Berkshire Hathaway Inc., the conglomerate he’s run for more than five decades, reported Friday that it held just shy of $100 billion in cash at the end of the second quarter. While that figure highlights the staggering money-making ability of the businesses he’s collected over the years, it’s also a burden. Because Berkshire doesn’t pay a dividend and rarely buys back its own stock, Buffett is on the hook to find ways to invest those funds.

“To put that money to work would be great,” said David Rolfe, chief investment officer at Wedgewood Partners, a money manager overseeing about $6 billion including Berkshire stock. But the “list of companies that he would like to own is very, very small.”

Well, if he has a problem with what to do with all that cash, I have a few suggestions. He could donate it to my favorite charity, me. Or he could actually pay some taxes for a change. Why he can even send the whole amount to the United States Treasury to help pay down the debt. Of course, that would mean he would actually have to do things he wants other people to do, and won’t do himself.

Buffett, 86, addressed the mounting cash pile at Berkshire’s annual meeting in May, saying he hadn’t put his “foot to the floor” on an acquisition for a while and shouldn’t keep so much money earning next to nothing for long periods. The war chest includes some cash-like securities, such as Treasuries.

What Buffett might want to consider is paying a dividend. Many companies pay dividends to their shareholders. Those companies that don’t are either having some cash flow problems, or just like to horde their cash and guard it with dragons or something.

Buffett has been finding a few places to invest. He built a holding in Apple Inc. through the beginning of this year. Then, in June, Berkshire made two smaller equity investments. One was a stake in a real estate investment trust and the other propped up Home Capital Group Inc., an embattled Canadian mortgage lender.

Most significantly, Berkshire’s utility arm struck a deal last month to buy Texas’s largest electric utility for about $9 billion. The transaction its being challenged by Paul Singer’s Elliott Management Corp., but completing it would make a sizable dent in the cash hoard.

I’m not that familiar with Berkshire Hathaway’s holdings, but it’s possible they might be running into potential anti-trust issues. I’ll let others far more knowledgeable then I am comment on that possibility.

Lots more is bound to pour in. Berkshire posted $4.26 billion in net income for the second quarter. The results were down 15 percent from a year earlier, partly on an underwriting loss at insurance businesses. But a number of Berkshire’s other subsidiaries — from railroad BNSF to its collection of manufacturing businesses — posted gains.

I think the Insurance losses might be due to Obamacare, but I can’t say for certain. Buffett was a big booster of Obamacare when it was in the process of being shoved down our throats. He saw it as a way, like all the other insurance companies that pushed for it, as a direct pipeline into the wallets of the American people. Of course, it didn’t work out that way and Obamacare is collapsing.

As for the railroads, one of the things they do is transship oil products, everything from crude to gasoline. Buffett was big on blocking the construction of pipelines since they would eat into his freight business. Pipelines also tend to be a lot safer.

Part of Buffett’s challenge in finding new investments may be the years-long bull market. With stocks regularly setting records, it’s simply harder to find attractive deals, said Jim Shanahan, an analyst at Edward Jones. The growing cash pile is also a sign of Buffett’s willingness to wait for the right opportunities.

Hello!?!? Feel free to invest here Warren! Just write a check for $25 million and I’ll promise you a nice loss for your taxes. You aren’t actually expecting anything in return, right?

One thing that could accelerate Berkshire’s spending is a correction — or even a bear market, said Bill Smead, who oversees about $2.2 billion including Berkshire shares at Smead Capital Management. In the past, Buffett has pounced when companies or the broader economy runs into trouble, making investments on favorable terms.

I’ve been seeing reports that the Dow is overdue for a correction and that we are going to have a recession. However, all these “Experts” have failed to understand that we never really got out of the last recession. Yes the Dow Jones is reaching ever new heights, but there has been an almost decade long disconnect between Wall Street and the real world.

Now that President Trump is working hard to undo the damage done by the last four presidents, (Obama, Bush, Clinton and Bush), and slashing regulations, things seem to be improving for the average person. We have a long way to go of course, and people like Buffett and George Soros have no problem wrecking an economy for their own personal gain, will do all they can to keep President Trump from winning. The times are changing and I hope for the better. As for Buffett’s cash problem?

Thatisall

~The Angry Webmaster~

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