Warren Buffett's mountain of cash: What could his company buy with it?

3/26/20 8:00PM

Back in November we explored the mounting cash pile that Berkshire Hathaway, run by legendary investor Warren Buffett, was building up. That cash pile has slowly but surely grown over the last decade, as Warren and his partner Charlie Munger haven't seen the opportunity to do any major deals.

In November stock prices were generally at, or very close to, all-time highs. Today that's not the case, with many stocks having fallen 25%+ in the last few weeks. That could mean Warren gets out his pen and starts writing some very big cheques.

‍What could Berkshire buy?

‍Because $125bn is an absurd amount of money to get your head around, we've tried to give it some, totally hypothetical, context. With about $125bn, and at the latest market prices, Berkshire could theoretically buy Uber, Lululemon, Spotify, Chipotle, Domino's Pizza and Ralph Lauren.

In reality that's an absurd proposition, for a multitude of reasons, not least of all because acquirers usually need to offer 20-40% above market price in order to get shareholders to go for the deal. But it does give a sense of the kind of magnitude of deal that Berkshire could go for.

Despite producing stellar returns for more than 50 years, Buffett took criticism from some commentators for having had a relatively more modest decade from 2010-2019, with some suggesting the "Oracle of Omaha" had lost his touch. With most companies significantly cheaper than they were just a few months ago, it looks once again like Buffett was ahead of the game by keeping some dry powder.

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

American Airlines updates bag fees and Basic Economy fares

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.