The Gabelli Value Investor Conference in Omaha brings together some of the sharpest minds in value investing.

The Berkshire Hathaway panel got asked a very interesting question this year:
’What should Berkshire Hathaway buy with all their cash?’

Let’s see what the 4 panelists answered!

Subscribed

Berkshire’s Cash Pile

At the time of the event, Berkshire Hathaway had nearly 30% of its assets in cash.

That’s around $397 billion.

It’s hard to get your head around such a number, so let’s look at some of the public companies Berkshire could buy outright with that kind of cash pile.

• Home Depot: $325 billion

• McDonald’s: $192 billion

• Booking Holdings: $130 billion

• Moody’s: $78 billion

Berkshire has most of that money parked in short term treasuries.

At 4% to 5% interest, simply letting the cash sit there generates $15 to $20 billion a year in pure interest income.

Again, to put it into perspective, here’s the revenue of a few well-known companies:

• AutoZone: $19 billion

• Texas Instruments: $18.4 billion

• Kimberly-Clark: $16.5 billion

• Markel Group: $16 billion

• Door Dash: $14.7 billion

Here’s a few companies with Net Income around the $15-$20 billion mark:

• Comcast: $18.7 billion

• MasterCard: $15.5 billion

• Coca-Cola: $13.7 billion

So Berkshire makes more profit than Coca-Cola does just by buying short-term Treasury Bills with its cash.

Deploying that much capital is very difficult.

The sheer size of the investments required to move the needle for Berkshire eliminates almost all publicly traded companies.

The target must possess an exceptional moat, outstanding management, and a valuation that makes sense.

Let’s see what companies each of the panelists thought Berkshire should buy.

Christopher Bloomstran

President and Chief Investment Officer, Semper Augustus Investments Group, LLC

Bloomstran is known as a disciplined, fundamental investor.

He founded Semper Augustus in 1998, and runs a concentrated portfolio of well-run, well-capitalized businesses.

He’s also known for his deep analyses of Berkshire Hathaway.

He suggested 2 dominant, cash-generating businesses for Berkshire to consider:

Microsoft