Berkshire Hathaway hit an all-time high Thursday of 339,769.60. That tops the previous high set in the fall of 2018. It closed Friday at 338,080. The current market value of the company is more than $552 billion. Its Class B shares also hit a new high of 226.52.
I disagree with those who argue that Berkshire has too much cash on its balance sheet. Although Berkshire has underperformed the S&P 500 in 2019, its performance over the past four years has closely matched that benchmark. Berkshire will consider acquiring a privately owned, or a publicly traded, company only if it is well managed, its management agrees to stay in place, and it is offered at the right price. What distinguishes Warren Buffett from others is both his skills as a CEO as well as a portfolio manager. His patience permitted Berkshire to be the investor of last resort during the Great Recession, resulting in lucrative investments in several companies including Goldman Sachs (2008) and Bank of America (2011). Although the current record economic expansion has exceeded 10 years and a recession in 2020 is unlikely, the economic cycle has not been repealed. Eventually the economy will experience another recession. Buffett’s war chest of over $100 billion could then be deployed at very attractive prices. Perhaps Buffett’s most attractive purchase at that time would be a large buyback of the shares of Berkshire Hathaway.
David I Kass
Clinical Associate Professor, Department of Finance
Ph.D., Harvard University
Robert H. Smith School of Business
4412 Van Munching Hall
University of Maryland
College Park, MD 20742-1815
Phone: 301-405-9683
Email: dkass@rhsmith.umd.edu (link sends e-mail)
Dr. David Kass has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management and Business Finance, and is the Faculty Champion for the Accelerated Finance Fellows. Prior to joining the faculty of the Smith School in 2004, he held senior positions with the Federal Government (Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis). Dr. Kass has recently appeared on Bloomberg TV, CNBC, PBS Nightly Business Report, Maryland Public Television, Business News Network TV (Canada), Fox TV, American Public Media's Marketplace Radio, and WYPR Radio (Baltimore), and has been quoted on numerous occasions by Bloomberg News and The Wall Street Journal, where he has primarily discussed Warren Buffett and Berkshire Hathaway. He has also launched a Smith School “Warren Buffett” blog. Dr. Kass has accompanied MBA students on trips to Omaha for private meetings with Warren Buffett, and Finance Fellows to Berkshire Hathaway’s annual meetings. He is an officer of the Harvard Business School Club of Washington, DC, and is a member of the investment and budget committees of a local nonprofit organization. Dr. Kass received a Smith School “Top 15% Teaching Award” for the 2009-2010 academic year.
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