Berkshire Investors Seek Clues on Next Purchase

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Discover Milan Italy with WSJ magazine and into Garay. Join WSJ magazine editors for behind the scenes access in Milan. As you meet the city's most influential taste makers dine at top restaurants. Visit the private villas of lake coamo and much more book. This once in a lifetime trip at integrate dot com slash WSJ magazine or call six four six seven eight zero eight three eight three. With what's news from the Wall Street Journal. I'm Anne Marie for totally in New York. Berkshire-hathaway investors are looking for clues on how the company will spend its money Warren Buffett the CEO of Berkshire Hathaway his mantra is kind of be fearful when others are greedy and be greedy. When others are fearful. And so it's a real pattern with his investing style. The Wall Street Journal's Nicole Freedman has more details on the company's annual letter to shareholders coming up. But first here are some other top stories. We're following a federal judge has imposed a gag order on longtime. Trump adviser Roger stone's saying his inflammatory posts on social media. Pose a real risk of inciting violence stone had posted a photo of judge. Amy Berman Jackson on Instagram that appeared to show crosshairs next to her head. He apologized and called the move a stupid lapse of judgement. The judge ordered stone to avoid further comments about his. Pending criminal trial on charges of lying and witness tampering. Chinese telecom giant hallway is gaining fans in India and other emerging tech markets for the low prices of its equipment despite warnings from the United States that the company is a quick moment. Could be used to spy for Beijing. The Wall Street Journal's Dustin volts explains for India to decide that they actually might want to stick with. Wow. A and not ban them or not trying to push them out of their commercial market. That's a huge win for China. If you put those two countries together that's virtually half of the world's population right there and would be a serious blow to western efforts to limit the Chinese telecommunications firms reach while way has long denied allegations that it's equipment could be used to spy for China. Online image. Search company Pinterest has confidentially filed paperwork for an initial public. Offering the Wall Street Journal reports that Pinterest is seeking a listing in late June, and is expected to seek evaluation of at least twelve billion dollars Pinterest joins a number of high profile tech, startups, working on IPO preparations this year AT and T plans to stop serving devices that use third generation or three g wireless technology and early twenty twenty two rival Verizon has already made a pledge to stop serving three g cell phones at the end of the year as telecom companies move toward new wireless technology T mobile and sprint which the former is seeking approval to acquire having announced hard deadlines to wind down their three g service still to come. We'll talk more about. Berkshire Hathaway's annual letter to shareholders which investors will be parsing for clues on how the company plans to spend its money. I sure Hathaway investors are hoping the company's annual letter to shareholders will offer clues on the company's next. Big purchase. It's been about three years since billionaire Warren Buffett made a large acquisition or elephant joining us now with more details is Wall Street Journal reporter, Nicole Freedman, Nicole. Berkshire Hathaway's last acquisition of aerospace manufacturer precision cast parts was back in twenty sixteen. But as you note in your piece, this isn't the first time, the company is held back on big investments and come out ahead because of it. Yes. So Warren Buffett the CEO of Berkshire Hathaway his mantra is kind of be fearful when others are greedy and be greedy. When others are fearful. And so it's a real pattern with his investing style that when the market is rising and valuations are getting higher Warren Buffett off in kind of sits back, and doesn't doesn't buy much doesn't make big investments. And then when there's a crisis or some sort of a downturn in the market. That's when he comes in with. A big hunk of cash to really spend it on on the opportunities that present themselves. And so this looks like another one of those situations where we're ten years into a bull market almost ten years and buffet has really been holding back saying prices are too high for his comfort level right now. But they're just amassing cash, and I'll shareholders are hoping they're waiting for another opportunity. If there is a market downturn to make some lucrative investments. Let's talk about the market conditions. Now, we are expecting that annual letter to shareholders and berkshires latest earnings results on Saturday. How is the company's stock been performing recently as compared to previous years, historically? Berkshire Hathaway has outperformed the general broader markets since Warren Buffett took over as CEO in the nineteen sixties, but in the last decade or so it really has not notably outperformed the S and P five hundred. And so again, investors really point to the fact that this is a bull market. These are not the investing conditions in which Warren Buffett thrives and really where he really distinguishes himself is. During downturns. And so they're hoping that not hoping for a downturn. But they're hoping that when the next downturn arrives at Berkshire will be well positioned and able to take advantage and then outperform the market again. What do we know about the role buffets lieutenants are playing in scouting out investment opportunities? He has been handing more daily operations over to them. Yes. So about a year ago. Berkshire promoted to executives Greg able and a g Jane to vice chairman, and those two men are really running a lot of the day to day operations of Berkshire's companies now and one of them is expected to eventually take over a CEO once Warren Buffett is no longer in charge. And then they're also to investing lieutenants per folio managers Ted Weschler and Todd combs that help Warren Buffett managed, the stock investments and all four of those men kind of are able to bring deals to Berkshire two buffets attention, if they if they find opportunities and they've really. Able to kind of broaden berkshires investing beyond the the typical industries that Warren Buffett knows really well, so for example, last year, Todd combs, one of the portfolio managers made to fintech investments financial technology, which is really outside of Warren Buffett's typical wheelhouse. These aren't companies that he would say he has expertise in. But this is something that Todd combs is more of an expert in and decided to make these investments on berkshires behalf because of Warren Buffett stature at the annual letter could also have implications for the broader market as well. And actually the difficulty of finding good deals is something that buffet brought up himself last year in the letter. Yes, it's something that buffets been complaining about for awhile now, and he's saying basically prices are too high. There's too much money sloshing around out there looking for deals, and so it's not it's not good for us. We like to buy things at reasonable prices. And so he probably will complain about that again this year and. Certainly the competition is fiercer than ever. There's more than two trillion dollars of private capital out there from private equity funds private debt infrastructure. Investors all looking to do deals and make acquisitions and those investors are under a lot of pressure to spend money quickly. And so they're often willing to pay higher prices, which could make it more difficult for Berkshire to find opportunities at the prices that it likes to pay Nicole any final thoughts on what we might expect on Saturday. What do the experts you spoke with say about the possibilities here? Well, one thing that investors are really looking for is what Warren Buffett says about buybacks, if he's planning to take some of Berkshire's cash, it has more than one hundred billion dollars in cash, and if it's going to return more of that money to shareholders, a lot of investors are hoping so and beyond that everyone's always interested in what Warren Buffett has to say about the broader economy, if he sees any sort of concerns or signals on the horizon, and then also if he weighs in. In at all about politics, and what he sees in the in the world right now. That's Wall Street Journal reporter, Nicole Freedman joining us in our studio to talk about berkshire-hathaway head of the company's upcoming earnings report, Nicole, thanks so much for joining us. Thanks for having me. And that's what's news. I'm Anne Marie for totally in New York for the Wall Street Journal.

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