Warren Buffett said Saturday that his company Berkshire Hathaway Inc. (BRK.A - Get Report) , (BRK.B - Get Report) wants to make an "elephant-sized acquisition" with some of its $132 billion in liquidity, but can't do so right now because that "prices are sky-high for businesses possessing decent long-term prospects."
"In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will permanently own. The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects," Buffett wrote in his widely anticipated annual letter to Berkshire shareholders.
However, Buffett added that he and long-time Berkshire Vice Chairman Charlie Munger "continue, nevertheless, to hope for an elephant-sized acquisition. Even at our ages of 88 and 95 -- I'm the young one -- that prospect is what causes my heart and Charlie's to beat faster. (Just writing about the possibility of a huge purchase has caused my pulse rate to soar.)"
Still, the "Oracle of Omaha" wrote that his remark about "sky-high" stock prices "is not a market call. Charlie and I have no idea as to how stocks will behave next week or next year.
"Predictions of that sort have never been a part of our activities," Buffett wrote. "Our thinking, rather, is focused on calculating whether a portion of an attractive business is worth more than its market price."
The Berkshire chair added that even if his company does find a major company to buy, it always intends to retain a large cash position.
"Berkshire held $112 billion at year end in U.S. Treasury bills and other cash equivalents, and another $20 billion in miscellaneous fixed-income instruments," Buffett wrote. "We consider a portion of that stash to be untouchable, having pledged to always hold at least $20 billion in cash equivalents to guard against external calamities. ... Berkshire will forever remain a financial fortress."