The long-time business partners Charlie Munger and Warren Buffett failed to finalize one last deal together.
What Happened: Munger, the late vice chairman of Berkshire Hathaway Inc. BRK BRK, expressed optimism that the company, holding nearly $160 billion in cash, would eventually land its “elephant” deal.
During a CNBC special, Munger highlighted the company’s impressive cash reserve and excellent credit rating despite the inability to secure a significant deal. Munger suggested that the scale of Berkshire Hathaway’s operations requires a substantial transaction to make a significant impact, adding that the company is ready for a major deal despite his and Buffett’s absence.
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In recent years, Buffett has frequently hinted at a potential “elephant-sized acquisition.” While the company has made notable purchases, including insurer Alleghany Corp. for $11.6 billion and Dominion Energy‘s natural gas pipeline and storage assets for roughly $10 billion, none of these deals have matched the grandeur of the “elephant” Buffett envisioned.
With Berkshire Hathaway’s market value closing in on $800 billion, Munger believed the responsibility of making such a significant deal might fall on the next generation of the company’s leaders, possibly including Greg Abel, Ajit Jain, Ted Weschler, or Todd Combs.
Despite concerns over Berkshire Hathaway’s enormous cash reserve, especially during periods of near-zero interest rates, Munger defended the company’s strategic patience, stating that being awash in cash is a preferable position.
Price Action: On Thursday, Berkshire Hathaway Inc Class A and Berkshire Hathaway Inc Class B shares closed 0.3% higher in the regular session, according to the data from Benzinga Pro.
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