Warren Buffett has spoken. He can't find anything he'd rather buy than his own stock, and with $128 billion in cash to deploy, it's a real problem, asserts Todd Shaver, growth and income expert and editor of BullMarket Report.
Berkshire Hathaway (BRK.B) earned another $29 billion in profit last quarter so there's plenty of cash coming in. The days of shock losses from bad investments in companies like Kraft Heinz are over.
In theory, Buffett could simply buy back 25% of his company and replenish his cash hoard at a rate of $300 million a day.
However, he's always been a grudging fan of his own stock, preferring to buy other companies that offer real organic growth opportunities. Throughout last year he only spent $5 billion on buybacks. He'd much rather keep his powder dry otherwise.
He's waiting for a big dip to put serious money to work. That's how he scooped up massive amounts of Apple, Amazon and the big banks in addition to the consumer and insurance companies that made his initial fortune. When the financial crisis roiled the market in 2008, he grabbed blue-chip stocks at a deep discount, calling it a once-in-a-generation opportunity.
We can all learn from his discipline and optimism. He's buying into biotech and grocery chains now and doubled his stake in Occidental Petroleum, which we now recommend as well.
It's all about balance and seizing the day. You have to push the button when you get the right entry point, and the fact that Buffett hasn't seen a lot of great entries lately doesn't mean that his methodology or the market is broken. It only means that the day is coming when he'll strike again.
For now, it's business as usual. We expected $66.5 billion in revenue to turn into $2.40 per share in profit on the "B" shares. We got roughly those numbers, maybe a little light on the top line and a little better than predicted on the bottom but nothing to get upset about. When you're dealing with a behemoth, even $100 million here and there is practically a rounding error. We love this stock.