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Buffett Keeps Markets Guessing about His Next ‘Elephant’

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Berkshire’s acquisitions

Warren Buffett, Berkshire Hathaway’s (BRK-B) chair, has denied that the company is looking at buying PG&E Corporation (PGE). Berkshire’s cash pile and Buffett’s desire for an outright acquisition seem to be feeding the rumor mill.

In his 2018 annual letter, Buffett said that he and vice chair Charlie Munger “hope[d] for an elephant-sized acquisition.”

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Last major acquisition

The last major acquisition Berkshire completed was that of Precision Castparts, a manufacturer of components for aircraft manufacturers such as Boeing (BA). Berkshire had held a small stake in the company prior to the acquisition. Over the last couple of years, Buffett’s moves have surprised the markets. Berkshire is Apple’s (AAPL) second-largest shareholder now despite Buffett not being too comfortable with technology stocks (QQQ). However, the legendary investor sees Apple as a consumer company, not as a technology company. Last year, Berkshire surprised the markets by first buying a stake in Oracle (ORCL) in the third quarter and then selling the stock in the next quarter. The company’s Red Hat (IBM) investment also took the markets by surprise.

Could it be China?

Meanwhile, Buffett has kept the markets guessing over Berkshire’s next elephant. Buffett might also be looking at overseas opportunities.

On a lighter note, Buffett said at last year’s shareholder meeting, “In August, I’m going to be 88, and that will be the eighth month of the year, and it’s a year that ends with an eight. And as you and I both know, eight is a very lucky number in China. So if you find anything over there for me, this is the time we should be acquiring something.”

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