Warren Buffett is Ready to Deploy $80 Billion

Warren Buffett’s nose for bargains made him a centibillionaire. Now he has $80 billion to spend but almost nothing to buy.

The famed investor and Berkshire Hathaway CEO has struggled to find deals as stocks have soared to new heights, private equity firms and SPACs have priced him out of acquisitions, and a surge in his own company’s shares has made buybacks less compelling.

Buffett’s fortunes could turn if the Federal Reserve hikes interest rates this year to dampen inflation. If other investors pull their money out of equities and other risky assets, and higher borrowing costs deter buyers of businesses, Berkshire might be able to snap up some high-quality stocks and companies at knockdown prices.

Says Darren Pollock, portfolio manager at Cheviot Value Management:

“Warren Buffett would not repurchase shares automatically and at any price. If we see buybacks continuing at a strong pace, it will be a clear indication that Berkshire shares are still a better bargain than most, if not all, of the other large-cap opportunities that Buffett and his team are considering.

“We would like to see the team at Berkshire increase their stake in a few undervalued holdings, including Charter Communications, Visa, and Mastercard. It also wouldn’t surprise us to see shares of Comcast and Unilever added to the portfolio. These are businesses that are easy to understand and somewhat ‘boring,’ but they produce consistent cash flows and the shares appear relatively inexpensive.

“While the cash pile at Berkshire may grow, we firmly believe that there are far worse things than having dozens of businesses that produce an abundance of cash every month. But maybe we’re old fashioned.”

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