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Warren Buffett has the cash to buy Tesla, Starbucks, or McDonald's

markets.businessinsider.com

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Re: Warren Buffett has the cash to buy Tesla, Starbucks, or McDonald's

#21

Post by DennisP »

gizmo wrote: post #15
cryptica wrote: post #5

Whatever Warren Buffet does at this stage is going to be a success. Everything he does becomes self-fulfilling. People like him don't predict market movements, they cause them.

That's way too reductive. Yes, his reputation helps tremendously, but even as a complete unknown he would still be a world-class investor.

He actually did better when he was a complete unknown. Berkshire is huge now because Buffett averaged 20% annual gains for decades. Now his returns are down because it's hard to find good deals on companies big enough to matter to him.

Re: Warren Buffett has the cash to buy Tesla, Starbucks, or McDonald's

#22

Post by H8crilA »

dukoid wrote: post #8

Do the world a favor and buy Fox news or News Corp O:)

I believe he thinks that old media is mostly dead, or at least a rather poor investment (cigar butt at best, but they're not doing cigar butt for decades). And he's focused only on his fiduciary duty towards shareholders, whom he calls partners, not the world at large.

Someone like Seth Klarman may buy those if they get into deep distress. If it happened it would probably be via senior bonds and chapter 11.

Re: Warren Buffett has the cash to buy Tesla, Starbucks, or McDonald's

#23

Post by tim333 »

kneel wrote: post #11

They really need to tax this man, he's even on record saying how he needs to be taxed more.

Berkshire the company is one of the US's biggest taxpayers. Buffett himself is giving most of his money to charity (the Gates foundation).

Re: Warren Buffett has the cash to buy Tesla, Starbucks, or McDonald's

#25

Post by agustif »

kneel wrote: post #11

They really need to tax this man, he's even on record saying how he needs to be taxed more.

The problem is, in order to tax him, you would need to tax every other american mega-billionare in his tax-bracket, and that probably doesn't sit well with recurrent SUPERPAC donors which legally influence your politicians with loads of cash for their political campaigns.

Re: Warren Buffett has the cash to buy Tesla, Starbucks, or McDonald's

#27

Post by H8crilA »

gizmo wrote: post #12
jack_pp wrote: post #10

Can someone with more experience explain what does "cash" mean in this context? Is it saying that 100 billion isn't actively invested and is simply being depreciated by inflation? It's said it's tied up in 'short-term investments' but that's not clear to someone who doesn't have knowledge of this domain.

Berkshire has almost all of their cash in short term treasury bills. It's a cash equivalent, because you don't want to keep 100bn in a checking account, and it does get hurt by inflation. But that's OK, because making a purchase when the time is right will more than make up for it. Cash is still king, in Buffet's world.

I'd just add that in addition to that $128B in liquid Treasury securities (which is what "cash" means when we talk about such large amounts) they also have about $103B debt that cancels their net cash-debt position to about $25B. The debt has long maturity, though, so most of the cash can be deployed immediately.

Also, Buffett applies something like the Taleb's "barbell method" to his holdings: he never buys high grade corporate bonds. It either has to be something "distressed", a convertible, a preferred stock, warrants, common stock well below intrinsic value, best if they call him and beg him to buy, i.e. something with high potential returns, or "pristine" and boring assets, like govt securities.

As he says himself - when things get bad everything freezes. In 2008 even Berkshire couldn't get credit.

Re: Warren Buffett has the cash to buy Tesla, Starbucks, or McDonald's

#28

Post by KarlKemp »

t0mas88 wrote: post #20
wiredfool wrote: post #9

Earlier quoted context omitted.

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