There aren’t many people who turn 93 and have people wondering what’s next for them. But Warren Buffett, whose birthday is today, isn’t normal people.
Dubbed the “Oracle of Omaha” for his nearly six decades of money-gaining insights during his time as CEO of conglomerate Berkshire Hathaway (ticker: BRK. A, BRK.B), Buffett’s investment moves are still watched closely by Wall Street.
Shares of Berkshire Hathaway climbed to a record high earlier this month after reporting that operating earnings rose more than 6% to $10 billion in the second quarter—marking a new record. Meanwhile, Berkshire’s cash pile swelled to nearly $150 billion, up from $130.6 billion in the prior quarter as the firm pared back stock positions.
In prior periods, Wall Street has been frustrated with Berkshire’s cash largesse, hoping that Buffett would deploy capital into an acquisition—or perhaps a dividend.
But now cash is looking smart: Buffett revealed to CNBC earlier this month that he has been a consistent buyer of three- and six-month U.S. Treasury bills, which yield more than 5.5%.
He also shrugged off ratings agency Fitch downgrading U.S. debt in early August. “There are some things people shouldn’t worry about,” Buffett told CNBC at the time. “This is one.”
So great is the trust in Buffett that investors don’t seem to mind that Berkshire eased up on buybacks during the second quarter, repurchasing $1.4 billion worth of shares compared with $4.4 billion in the prior quarter, as the company’s stock climbed.
“Berkshire has always been respected for patience, they won’t spend more on repurchases than the perceived economic value,” Meyer Shields, managing director at Keefe, Bruyette & Woods, told Barron’s. KBW has a Market Perform rating on shares and a $565,000 price target.
Of course, the trust that has been afforded to Buffett and his co-pilot, 99-year-old Berkshire vice chairman Charlie Munger, is also something of a concern for the company. The firm has often been coy about succession—a challenge for corporate governance especially when the top two spots are held by nonagenarians. In 2021, Buffett revealed to CNBC that Greg Abel, Berkshire’s vice chairman of noninsurance operations, will succeed him, but details have still felt scant.
“Buffett has had an unprecedented career,” Shields said, explaining how Wall Street may be okay with a lack of disclosure from him. “Buffett can get away with that, I don’t know if his successor could.”
But, for now, Wall Street doesn’t want to think of that day.
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