Warren Buffett, known as the “Oracle of Omaha,” has turned 93, and the world is curious about what lies ahead for him. Unlike most people his age, Buffett is still making waves in the financial world.
During his tenure as CEO of Berkshire Hathaway, Buffett has gained a reputation for his astute money-making insights. Wall Street continues to closely watch his investment moves. In fact, shares of Berkshire Hathaway recently reached a record high, driven by a 6% increase in operating earnings to $10 billion in the second quarter.
What sets Buffett apart is not just his successful investments, but also his cash management strategy. Despite frustrations from Wall Street in the past about Berkshire’s large cash reserves, Buffett’s recent actions are proving his wisdom. He disclosed to CNBC that he has been consistently purchasing three- and six-month U.S. Treasury bills, which offer yields of over 5.5%.
Even Fitch’s downgrade of U.S. debt in early August did not sway Buffett’s confidence. He firmly stated, “There are some things people shouldn’t worry about. This is one of them.”
Buffett’s unconventional approach to investing and his ability to stay calm in uncertain times have solidified his status as one of the most respected figures in the financial world. As he celebrates his 93rd birthday, the world eagerly awaits what he will do next.
Trust in Buffett Persists
Investors continue to place their unwavering trust in Warren Buffett and his esteemed reputation, demonstrating little concern even as Berkshire Hathaway scaled back on buybacks during the second quarter. While the company only repurchased $1.4 billion worth of shares compared to $4.4 billion in the previous quarter, the rising stock value seemed to outweigh any apprehension.
Meyer Shields, Managing Director at Keefe, Bruyette & Woods, acknowledges Berkshire’s long-standing ethos of patience when considering buybacks, emphasizing that they do not exceed the perceived economic value. Shields affirms this sentiment with KBW maintaining a Market Perform rating on Berkshire shares and setting a price target of $565,000.
Despite the immense trust placed in Buffett and his longtime partner, Charlie Munger, who serves as the vice chairman of Berkshire at the age of 99, there are valid concerns surrounding succession planning and corporate governance. The firm has historically been elusive about detailing its succession plan, prompting understandable doubts given that both top spots are occupied by nonagenarians. Although Buffett confirmed that Greg Abel, current vice chairman of noninsurance operations, will succeed him during an interview with CNBC in 2021, specific details still remain scarce.
Shields reflects on Buffett’s unmatchable career and how he has earned the privilege of operating with less disclosure. However, he questions whether Buffett’s successor will be afforded the same luxury in the eyes of Wall Street.
For now, it seems Wall Street prefers not to ponder the inevitable future.
By Carleton English