One company many investors, including myself, pay close attention to each and every quarter is Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B). In addition to reading Buffett’s very informational (and entertaining) quarterly letters to shareholders, examining where Berkshire is investing, and in what quantities, is a useful exercise for investors to peer into the mind of one of the world’s most successful long-term investors.
In Berkshire’s most recent quarterly letter to shareholders, Buffett spoke of the need for the company to make large investments that would impact Berkshire’s bottom line. A lack of investment opportunities at the right price has led to a lack of deals for the conglomerate, a sign to many in the investment community that valuations are unreasonable at current levels.
Buffett has himself indicated that additional prudence is needed in this market to avoid falling into the "fear-of-missing-out" trap that many investors fall into during the latter stages of a bull market. With more than $116 billion U.S. in cash and cash equivalents sitting on Berkshire’s balance sheet, investors may have been hoping Buffett would put more of his cash to work in this current environment.
Predicting exactly what the Oracle of Omaha and his team of trusted money managers chooses to do next is a very difficult exercise. Indeed, few would have predicted the company’s massive investment in Apple Inc. (NASDAQ:AAPL) in recent years.
I expect to see more "nibbling at the edges" in the quarters to come – when a correction or recession does hit, however, I expect to see the real action begin.
Invest wisely, my friends.
