Even the most successful investors go through bad times. Berkshire Hathaway’s Warren Buffett is on a mission to reconcile things for his firm. One of his first moves to make things right was to sell 30 million shares of IBM in early 2017. Buffett was a long-term supporter of the company and once held shares worth $13 billion in the technology company. However, now, he believes that the deep-pocketed company has run into tough competition. His 6-year long unwavering support is faltering now. Is Buffett looking for new horizons and re-adjusting his portfolio?
Buffett Not Interested in Past Investments Anymore?
Warren Buffett criticized Wells Fargo recently, stating that the company allowed too much autonomy to the staff. He said that the company caused a scandal by failing to keep corrupt employees in rein and letting frauds happens. Berkshire Hathaway owns 10 percent stake in the company, worth $27 billion. They are also the biggest stakeholders of the bank. Buffett said, “If there’s a major problem, the CEO will get wind of it. At that moment, that’s the key to everything. The CEO has to act. The main problem was they didn’t act when they learned about it.”
In the annual meeting of Berkshire held in Omaha, the 86-year-old investor answered questions about his investments. Even though Buffett criticized the company, CEO, and top officials for unethical behavior, he still holds stake in the company. Last month, the entire board was re-elected, thanks to his support. Berkshire has long avoided the airlines businesses but now that the firm has moved into this field, Buffett defended his decisions. The firm is currently a top investor in United Continental Holdings Inc., Delta Air Lines Inc., American Airlines Group Inc., and Southwest Airlines Co. He also praised Ajit Jain, who some believe could be is successor.
Berkshire Needs an Opportunity- A Big One
There is no doubt that Berkshire is one of the biggest investment firms in America. It has a market valuation of $411 billion and continues to be a top investor in major businesses. Its equity portfolio alone is $135 billion. However, it has about a $100 billion in cash which bothers shareholders. Buffett talked about his failure to get big deals and grab tech stocks at length. However, with a massive stockpile of cash, the company needs to work its way quickly to make things right.
For now, Buffett has presented his inability to make tech stocks moves and diving into more diversified sectors. However, he has hinted that the company could pay a dividend soon. Will Berkshire Hathaway’s next move be directed by him? He has hinted that his successor may take over with the primary responsibility to reducing the cash pile. Could it be Ajit Jain?