Really interesting question below about the future of Berkshire.
Over the weekend, Buffett spoke at the annual shareholder meeting and it was revealed that Berkshire is now sitting on around $400B of cash. Buffett noted that he'd much rather be patient vs. allocate any capital as he feels the market is a casino right now.
If the question is on where to put that cash to work, I think there is one broad big picture question that overhangs on Berkshire:
Berkshire needs their new $AAPL.
It's probably hard to find it given how much tech has run, but without Apple, Berkshire would have underperformed the S&P over the past 10 years. They took a $5B stake in Google last year, but that pales in comparison to the $35B they put into Apple 10 years ago.
Maybe the tech trade has run too hot and holding onto the cash makes sense before going heavy into another tech play like that again, BUT if tech continues on the bull run that it has been on for the past 5 years, Berkshire will not only be able to rely on Apple for the majority of performance. They will need a new winner.
Dare I say, I think that winner, even after the run, is $AMZN due to the diversity of it's model, operating margins on the path to 20%, the eventuality of it becoming the first $1T revenue run rate business, and robotics as the inflection for cost savings at scale which will return FCF back to shareholders. They haven't even bought a single share of stock back.
Berkshire bought Apple mainly on the logic that it is a consumer play on hardware, not a tech company. Obviously, many tech investors would disagree, but you could basically apply that logic to Amazon. They are a verb at this point, a consumer play on buying things that everyone on the planet uses, but they have these other elements to the business like AWS/Prime/Leo/etc. that allow margin expansion at scale.
Maybe Amazon is the safest and most effective way for Berkshire to find their next Apple.
Jonah Lupton: Now that Warren and Charlie are no longer running the company... what do you think Berkshire Hathaway and the new management team should do with their $400+ billion of cash? $BRK $BRK.A $BRK.B
I joked last year that $BRK should buy $INTC but clearly that ship has sailed.
I
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