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Companies loaded with the green stuff can provide smoother sailing in a turbulent global economy.
By Tom Petruno, From Kiplinger's Personal Finance, December 2015
3. Berkshire Hathaway (BRK.B, $130)
Warren Buffett’s holding company is a fabled refuge for investors who expect their corporate managers to be highly value-conscious in putting money to work—and to think long term. To that end, Berkshire has religiously kept hefty cash
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sums on hand, ready to invest when bargains arise. In August, Berkshire said that it would buy aerospace parts supplier Precision Castparts in a deal worth $37 billion—Buffett’s biggest purchase ever. Even after that, Berkshire should have more than $40 billion in cash, about half of which Buffett can use to take advantage of other opportunities (he prefers to have at least $20 billion in the till).
With Berkshire Class B shares down 14% from their 2015 high, the stock is priced at about 1.3 times the company’s book value (assets minus liabilities) per share. In the past, Buffett has suggested that Berkshire would be a bargain at about 1.2 times book value. Berkshire investors get a conglomerate that is a widely diversified bet on long-term economic growth. It includes a core insurance business
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(led by Geico), a stable of about 60 individual firms (including Duracell, Burlington Northern railroad, See’s Candies and Fruit of the Loom) and a stock portfolio that includes big stakes in Coca-Cola, IBM, Wells Fargo and others. All in all, analysts on average estimate that Berkshire will generate revenues of $212 billion in 2015.
Some investors may fret about another number: 85, Buffett’s age. To invest in Berkshire now, you have to trust Buffett when he says he has built a company that will have no trouble outliving him.
Read more at www.kiplinger.com/article/investing/...tml#EtLt7qiUhEhqCO1G.99
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