Skip to Content
Stock Strategist

What's Berkshire Going to Do With All That Cash?

Acquisitions, investments, share repurchases, or dividends are some options.

Mentioned: , , , , , ,

We think two big concerns about  Berkshire Hathaway (BRK.A)/(BRK.B)--first, that its size will prevent it from growing at a decent clip in the future, and second, that the shares will get pummeled once Warren Buffett no longer runs the show--have kept some investors on the sidelines. While we do not expect Berkshire to be able to consistently increase book value per share at a double-digit rate going forward--a feat the company achieved six times during 2009-18--we think it is still capable of achieving a high-single- to low-double-digit rate annually. This should leave returns solidly and consistently above Berkshire’s cost of capital, which is what we expect from companies with wide economic moats.

As for succession planning, Buffett’s three main roles--chairman, CEO, and investment manager--are expected to be split once he departs. Our long-standing view has been that Buffett’s son, Howard Buffett, will serve as nonexecutive chairman and that Ted Weschler and Todd Combs will serve as co-investment managers of Berkshire’s investment portfolio. For the CEO role, we think there are two fine candidates in Ajit Jain and Greg Abel, both of whom would bring unique insights. Our preference, though, would be to have Jain take control of all of Berkshire’s insurance operations while Abel (who has experience with both operations and acquisitions) fills the role of chief executive.

Greggory Warren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.