Billionaire Warren Buffett has lamented his inability to find big firms to buy, saying his goal is to make “one or more huge acquisitions” of non-insurance businesses to bolster results at his conglomerate Berkshire Hathaway Inc.
In his annual letter to Berkshire shareholders, Buffett admitted that finding things to buy at a “sensible purchase price” has become a challenge, a major reason Berkshire is awash with $116 billion (Sh11.7 trillion) of low-yielding cash and State bonds.
Buffett said a “purchasing frenzy” binge by deal-hungry chief executives employing cheap debt has made that task difficult. Berkshire typically pays all cash for acquisitions.
“Our smiles will broaden when we have redeployed Berkshire’s excess funds into more productive assets,” Buffett wrote.
“Berkshire’s goal is to substantially increase the earnings of its non-insurance group. For that to happen, we will need to make one or more huge acquisitions.”
It has been more than two years since Berkshire made a major purchase, the $32.1 billion (Sh3.21 trillion) takeover of aircraft parts maker Precision Castparts Corp.
Last month, Buffett gave greater oversight of Berkshire’s non-insurance businesses such as the BNSF railroad, Precision Castparts and Dairy Queen ice cream to energy executive Gregory Abel, while insurance specialist Ajit Jain added supervision of insurance operations such as the Geico auto insurer.
Both are considered candidates to replace Buffett, 87, as Berkshire’s chief executive. Many investors consider Abel, who is a decade younger than Jain, the frontrunner.
Berkshire on Saturday reported a record quarterly and annual profit, both of which received a $29.1 billion boost from the recent lowering of the US corporate income tax rate, which reduced its deferred tax liabilities.
Quarter four net income increased five-fold to $32.55 billion (Sh3.3 trillion), or $19,790 (Sh2 million) per Class A share, from $6.29 billion (Sh630 billion), or $3,823 (Sh383,000) per share, a year earlier, while annual profit rose 87 per cent to $44.94 billion (Sh4.5 trillion).