This article originally appeared on the Motley Fool.
As always, the topics were as varied as the answers were colorful. Here are five highlights investors should know.
1. How will Berkshire spend its $96.5 billion cash hoard?
In Berkshire’s first-quarter earnings report, which was released the day before the meeting, the company revealed a cash stockpile of $96.5 billion. And unlike many companies with massive stockpiles of cash, Berkshire’s is mostly stashed in the U.S., meaning it could easily be put to work.
Now, Buffett likes to keep at least $20 billion in cash on the balance sheet at all times at an absolute minimum, but that still leaves massive potential for acquisitions and/or stock investments. Munger even said that Berkshire could potentially do a $150 billion deal tomorrow, if it was willing to take on some debt and/or sell some stocks.
Unfortunately, good opportunities are getting more difficult to find. In reference to Berkshire’s acquisition of Precision Castparts, Munger pointed out that “this is no screaming bargain like the old days,” and Buffett agreed, saying that compelling bargains are tough to find — hence the stockpile of cash.
So, what would prompt Berkshire to start putting its cash to work? Essentially, Buffett said that Berkshire wants to acquire businesses that will have a competitive advantage over the next five to 10 years, whose management teams are strong, and that are offered at a fair price. For more color, Buffett has actually laid out Berkshire’s acquisition criteria in some of his annual letters to shareholders, and you can read about them here.
Buffett also said that if there’s a persistent shortage of attractive investment opportunities, Berkshire may eventually choose to increase its buyback criteria of 120% of…