WARREN BUFFETT: We're hunting for an 'elephant-sized acquisition'
- Warren Buffett, the chairman and CEO of Berkshire Hathaway, released his annual letter to shareholders on Saturday.
- Buffett wrote that he and his vice chairman, Charlie Munger, still hoped to make a large acquisition.
- Buffett said in last year's letter that he wanted to make a big deal, but companies' valuations were too expensive.
Warren Buffett, the chairman and CEO of Berkshire Hathaway, wrote in his annual letter released on Saturday that he remained on the hunt for a sizeable acquisition - but potential targets were still too pricey.
Buffett said that in the coming years, he and his vice chairman, Charlie Munger, hope to devote much of their excess liquidity to "businesses that Berkshire will permanently own.""The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects," Buffett wrote. "That disappointing reality means that 2019 will likely see us again expanding our holdings of marketable equities. We continue, nevertheless, to hope for an elephant-sized acquisition."
He added: "Even at our ages of 88 and 95 - I'm the young one - that prospect is what causes my heart and Charlie's to beat faster. (Just writing about the possibility of a huge purchase has caused my pulse rate to soar.)"
Buffett included a similar complaint in last year's letter to shareholders:
"In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price. That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high."
The Omaha-based giant hasn't made a monster, public acquisitions in recent years.
Last year, one of Berkshire Hathaway's affiliates, HomeServices of America, bought a private, Texas-based residential real-estate company for an undisclosed amount.Back in 2014, Berkshire bought Procter & Gamble's Duracell battery business in a complex transaction wherein Berkshire gave Procter & Gamble $4.7 billion of the P&G shares it owned at the time.
The shareholder letter, released alongside Berkshire Hathaway's quarterly earnings results, came a day after one of the company's investments - Kraft Heinz - plunged 27% and led to an estimated $4 billion in losses for the company.
Read more of Markets Insider's Berkshire Hathaway coverage:
- WARREN BUFFETT: The new accounting rule will produce 'wild and capricious swings in our bottom line'
- WARREN BUFFETT: Berkshire Hathaway raked in $3.8 billion in dividends last year - here's how much our 5 biggest holdings paid
- Warren Buffett's Berkshire Hathaway is taking a nearly $4 billion hit as Kraft Heinz craters to a record low