Buffett Watching: The World’s Most Profitable Pastime
There’s been a lot of headlines about Berkshire Hathaway using some of its massive pile of cash to buy insurer Allegheny Corp. For most companies this is a huge purchase and it’s Buffett’s largest in some time. On its face, this is a signal that the world’s greatest investor thinks it’s buying season.
Berkshire is in the insurance business because it gives them cost free capital to make equity investments. For proof, see…every letter to shareholders he’s ever written.
Every other insurer uses their premiums to buy bonds so they can safely pay their bills and buy vacation homes, but not Berkshire. They underwrite very carefully, and they have enough cash flow from other businesses that they can take actual risks with their float. Buffett doesn’t leverage with debt, but he ABSOLUTELY uses other people’s money.
Buying another insurer isn’t him deploying cash because the market looks appealing; he just levered the fuck up. I’m betting he still thinks most shit is still too expensive (except OXY).
Submitted March 22, 2022 at 08:55PM by mironp
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