Warren Buffett's Berkshire Hathaway Hits A Record $700 Billion Market


Warren Buffett's Berkshire Hathaway notched a record $700 billion market capitalization.

However, while most CEOs would be popping the champagne, Buffett may have mixed feelings about the achievement.

The legendary bargain hunter is itching to spend about half of Berkshire's $149 billion cash pile, but he has struggled to find deals in recent years.

Stocks have climbed to record highs.

Private equity firms and special-purpose acquisition companies are pricing him out of acquisitions.

Short of options, Buffett has been ramping up stock buybacks.

As a result, Berkshire repurchased a record $25 billion of its shares in 2020 and likely surpassed that figure last year.

However, the investor has emphasized that he will only buy back shares at a price below his conservative estimate of Berkshire's intrinsic value.

"It is hard to go wrong when you are buying dollar bills for 80¢ or less," Buffett quipped in his 2012 shareholder letter.

If Berkshire stock blows past Buffett's price ceiling for buybacks,

He could be forced to rein in or halt his repurchases, shutting a key avenue of spending for him.

The investor pegged the value of Berkshire's businesses at around $700 billion during the company's shareholder meeting last year.

Suggesting he might not see its shares as a bargain any longer.

However, there is reason to believe that Buffett puts a higher value on Berkshire.

The so-called "Oracle of Omaha" told his shareholders in 2008, when Berkshire's market cap was about $200 billion.

That the company could theoretically be acquired for triple that amount.

"There is no guarantee that if somebody wanted to try a $600 or $700 billion takeover."

"It might be a lot larger than that if you go out a way that it cannot be done," he said.

While Buffett was pricing in a takeover premium, he considered $700 billion a fair offer for Berkshire 13 years ago.

Given that his company's net assets have quadrupled in value to about $450 billion since then.

He probably values Berkshire a lot more highly today and might not balk at repurchasing its stock at current levels.

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