Despite $157B Berkshire Cash Reserves, Final Deal Falls Through for Charlie Munger and Warren Buffett

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Long-time business partners Warren Buffett and Charlie Munger have faced a setback in pursuing a final deal together. Munger, the late vice chairman of Berkshire Hathaway, expressed optimism regarding the company’s substantial cash reserve of nearly $160 billion, despite the failure to secure a significant deal. During a CNBC special, Munger emphasized Berkshire Hathaway’s impressive credit rating and readiness for a major transaction, considering the company’s significant scale of operations.

Buffett had previously hinted at the possibility of an “elephant-sized acquisition” in recent years. While Berkshire Hathaway has made noteworthy purchases, such as the $11.6 billion acquisition of insurer Alleghany Corp. and the approximately $10 billion purchase of Dominion Energy’s natural gas pipeline and storage assets, none of these deals matched the grandeur of the envisioned “elephant” deal.

As Berkshire Hathaway’s market value approaches $800 billion, Munger suggested that pursuing a substantial deal might fall on the next generation of the company’s leaders. Names like Greg Abel, Ajit Jain, Ted Weschler, and Todd Combs could play a crucial role in shaping the company’s future.

Despite concerns about Berkshire Hathaway’s significant cash reserve, especially in an environment of near-zero interest rates, Munger defended the company’s strategic patience. He stated that being awash in cash is preferable, indicating the company’s commitment to finding the right opportunity for a major deal.

In Thursday’s trading session, Berkshire Hathaway Inc Class A and Berkshire Hathaway Inc Class B shares closed 0.3% higher in the regular session.