The Most Underrated Part of Berkshire Hathaway Has Nothing to Do With Its Cash Pile
Berkshire Hathaway's cash hoard is valuable, but the story of the company's success is more fundamental.
The Most Underrated Part of Berkshire Hathaway Has Nothing to Do With Its Cash Pile
Overview
Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) is a shockingly diversified industrial conglomerate. However, it is classified as a finance company due to its large insurance operations. This is an important nuance to consider as you examine the nearly $400 billion in cash on the company's balance sheet. It is an important safety valve and provides firepower for investments when the time is right. But cash isn't what this business is built on; the float is.
From a big picture perspective, Berkshire Hathaway does a lot of things. However, former CEO Warren Buffett was really an allocator of capital, treating the company as his personal investment vehicle. Basically, buying Berkshire Hathaway was a way to trade alongside Warren Buffett. The fact that Berkshire Hathaway has a huge cash hoard today has nothing to do with Buffett's long-term success.
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Originally published at www.fool.com.
