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.
