OMAHA, NEBRASKA - Warren Buffett told shareholders on Saturday that he wanted to reduce Berkshire Hathaway's cash pile, and there was a small chance he would make an acquisition that could take up to US$15 billion ($23.38 billion) of cash.
The chairman and chief executive, speaking at Berkshire's annual meeting, also said he sees the US dollar weakening further but said he reduced his stake in foreign currency contracts because there were better ways of avoiding damage to company profits.
The billionaire investment legend said Berkshire did not need anything like the US$40 billion ($62.36 billion) or so it has in cash, and would ideally like to shrink the pile to about US$10 billion.
Berkshire is a conglomerate of many business units such as Benjamin Moore & Co, Fruit of the Loom and International Dairy Queen, which make paint, underwear and ice cream.
The bulk of its business comes from insurance through subsidiaries such as reinsurer General Re and car insurer Geico.
Speculation has mounted of late about what Buffett will do with Berkshire's cash. Earnings released on Friday showed the company's cash position fell to US$42.86 billion from a revised US$45.02 billion at year-end.
Berkshire said it would use some of it to boost its international presence, announcing it would buy 80 per cent of Israel's Iscar Metalworking in a transaction valuing the closely held tool firm at US$5 billion.
The Iscar deal helps fulfill Buffett's long-stated desire to make "major" acquisitions, which he said in March were needed to produce "truly satisfactory gains" in operating earnings at Berkshire.
The disclosure on Saturday that there is a low probability that Buffett could make an acquisition of up to US$15 billion may fuel speculation about possible targets.
Buffett said later in the meeting that he expected to get more opportunities for acquisitions in the utilities field. In March, Berkshire's MidAmerican Energy Holdings Co unit acquired the western US utility PacifiCorp from Scottish Power Plc for US$5.1 billion in cash, Buffett's biggest purchase in eight years.
Berkshire's first-quarter profit rose 70 per cent to US$2.31 billion, or US$1501 per share. Buffett said on Saturday he likes the idea of getting earnings power from other countries around the world.
For the last quarter, Berkshire posted a US$151 million gain from its bet the US dollar would fall, but its stake in foreign currency contracts declined.
Berkshire is diversifying through foreign acquisitions or taking holdings in companies with substantial operations overseas.
- REUTERS
Buffett aims to reduce cash
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