After Q4 earnings, Berkshire Hathaway holds $167.6 billion, actively navigating a competitive M&A market
An equities expert suggests the current mergers and acquisitions (M&A) market is less appealing for Berkshire Hathaway Inc.
This assessment follows the Omaha-based conglomerate's fourth-quarter earnings report.
According to BNN Bloomberg, Cathy Seifert, a director at CFRA Research, shared insights on Berkshire Hathaway's recent financial performance and its position in the M&A landscape.
In an interview with BNN Bloomberg, Seifert stated that Berkshire Hathaway, led by Warren Buffett, delivered a “decent quarter given the backdrop” and surpassed expectations.
The company's valuation is approaching the US$1tn mark, bolstered by its latest financial results. Notably, Berkshire Hathaway's cash holdings have soared to a record $167.6bn.
Seifert pointed out that while Berkshire Hathaway has substantial cash reserves, it is unlikely to use all of this for acquisitions due to the necessity of maintaining liquidity for its insurance business. She remarked that the company possesses an “adequate amount of dry powder” to engage in a deal.
“But again, the market valuations are probably getting a little rich for Berkshire's appetite. They've got a lot of competition in the M&A environment from private equity, venture capital (and) industries consolidating. So, it definitely is challenging,” said Seifert.
Despite these challenges, Seifert expects acquisitions to remain a key component of Berkshire's capital allocation plan and remains optimistic about the company’s prospects.
Seifert’s optimism is also driven by the strength of Berkshire's insurance franchise, particularly in the property and casualty insurance space, where she sees significant pricing power.
Berkshire Hathaway reported a substantial increase in its operating earnings, which rose to $8.48bn during the fourth quarter, up from $6.63bn in the same period a year earlier.
