Warren Buffett’s Berkshire Hathaway can afford to buy almost any of America’s public companies after coronavirus fears decimated their market capitalizations in recent weeks.
The famed investor’s conglomerate boasted $125 billion in cash, cash equivalents, and short-term investments in US Treasuries at the end of December. Assuming that figure hasn’t changed, and looking purely at market caps while ignoring whether a purchase would be feasible, sensible, or even legal, Berkshire could buy one of more than 450 companies in the S&P 500, more than 80 in the Nasdaq 100, and 11 in the Dow 30 without needing a loan, as of the close of trading on March 27, Business Insider reported.
For example, Berkshire could afford McDonald’s ($125 billion) or PayPal ($118 billion) in the S&P 500. On the Dow, it could snap up Boeing ($102 billion), IBM ($100 billion), or Goldman Sachs ($57 billion) without blowing its budget.
According to Business Insider, In the Nasdaq 100, neither Tesla ($97 billion) nor Starbucks ($82 billion) would break the bank.Moreover, shareholders of a company on the auction block typically demand a premium to its current market cap to reflect its future earnings potential.
As a cautious investor, Buffett would undoubtedly snub many of these businesses. However, the raft of possible acquisitions in his price range highlights both the scale of the recent sell-off and the rich potential of Berkshire’s huge cash pile.