Berkshire Hathaway’s owner, Warren Buffett, is likely to increase investments for acquisitions in 2020. As reported by Financial Express yesterday, December 29, 2019, “The Oracle of Omaha Warren Buffett is likely to make an ‘elephant-sized’ acquisition next year and it will probably be in the transportation sector.” Buffett’s company recently faced a decline of 11% profit in the third-quarter (Q3) for the current fiscal year due to the increase in its investment across other companies.
Acquisition Plan of 2020
According to the recent Forbes Real-Time Billionaires List, Warren Buffett is the world’s fourth-richest person with a net worth of $88.8 billion behind Jeff Bezos, Bernard Arnault (and family), and Bill Gates in 2019. Buffett’s Berkshire Hathaway is currently worth $128 billion. The company is looking for investing in capital funding in more companies and plans to acquire some ‘undisclosed’ firms.
Doug Kass, the President of the hedge fund Seabreeze Partners Capital Management, said on The First Trade, “I see Berkshire Hathaway as an S&P 500-style stock. It’s so diversified now in terms of its industrial and financial components. It’s very hard for the Oracle of Omaha (Buffett) to move the needle with any acquisition.”
Meanwhile, the 89-year-old billionaire has not yet revealed the name of the expected acquisition. However, Kass told Yahoo Finance’s The First Trade last week, “I believe Warren Buffett will acquire Federal Express (in 2020).”
Berkshire Hathaway, which is one of the leading financial management companies, has a minority share in several transportations and logistics-based companies including BNSF Railway Company, Charter Brokerage, McLane Company, and XTRA Lease. Moreover, the company owns a small share in FedEx’s rival, UPS, an American-based package delivery and supply chain management company.
Earlier in April 2019, Trip Miller, Managing Partner, Gullane Capital Partners had also suggested Buffett’s expected acquisition on CNN Business saying “This is the kind of thing Buffett looks for.” As Financial Express reported, “The likely acquisition of FedEx is among the three deals predicted by Kass for 2020, including Amazon’s acquiring of Kohl’s and Google’s acquisition of Twitter and Square.”
Current Financial Status of Buffett’s Company
As per a report, Berkshire Hathaway’s profits declined due to the increase in investments. The company’s officials revealed, “It made $16.52 billion in the quarter that decreased from $18.54 billion a year ago.” Buffett has asserted a slightly different version of the company’s status.
He previously claimed, “Berkshire’s operating earnings offer a better view of quarterly performance because they exclude investments and derivatives, which can vary. By that measure, Berkshire’s operating earnings improved to $7.8 billion, or USD 4,812 per Class A share, from $6.8 billion, or USD 4,186.05 per Class A share.” According to the company’s officials, “Whether Buffett will eventually pull the trigger on FedEx (or another company) or not, it probably won’t affect Berkshire Hathaway shareholders too much.”
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