America’s prominent investor, Warren Buffett’s latest investment stresses on the fact that the stock market is still over-valued. The Billionaire investor recently lost a bidding duel to a private equity firm even though Buffet holds a whooping $128 billion in cash for such purposes. Moreover, this also suggests that the Oracle of Omaha is finding it increasingly difficult to make expensive acquisitions.
Additionally, Buffett funded conglomerate holding company, Berkshire Hathaway, had offered $5 billion to acquire tech distributor giant, Tech Data Corp. Unfortunately, the company was out bided by a private equity firm named Apollo Global Management, which according to CNBC, had put up close to $6 billion. It is interesting to note that Tech Data assists tech companies such as Apple to bring products to market, which is also currently Berkshire’s largest investment with around $56 billion in stake.
In spite of boasting a record $128 billion in cash to for solely investment purposes, the renowned investor, Buffett, stepped out of the deal. This surprising move eventually raised numerous speculations around the overall market being overvalued.
As the global stock market hit its all-time highs in 2019, Buffett has highlighted in numerous occasions that the premium for buying businesses outright has reached unexpected highs. This finding can be attributed in part to the rising competition from private-equity firms such as Apollo. Staying true to the above belief, Berkshire has also been struggling to make new acquisitions or make any strategic investments from its growing cash pile. This is also due to that fact that Buffett views bidding wars as a complete waste of time and money.
In the latest annual letter that is sent to Berkshire Hathaway shareholders, the company’s chairman had publicly stated that the “prices are sky-high for businesses possessing decent long-term prospects.”
Note to the readers: Berkshire Hathaway market shares have lagged the broader S&P 500 index, exceeding by 15 percent throughout 2019. As of now, the stock is on its worst track record since 2009’s lows.
Key developments: Warren Buffett is still pursuing his search for a much awaited major acquisition. Buffett’s investment firm’s last big acquisition was made in 2016 on an aerospace company named Precision Castparts for $32 billion USD. Some of Berkshire Hathaway’s top holdings include the major global brands including American Express, Coca-Cola, Kraft Heinz, Bank of America, and Wells Fargo.
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