In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche
The potential of this are absolutely staggering. Just a few of the things Uncle Warren can do with all that cash include:
Buy America’s second largest grocer; Kroger (NYSE: KR), outright and still have $75.56 billion left in the bank. That’s amazing because Kroger reported revenues of $118.05 billion on 31 July 2017. Kroger had an enterprise value of $32.74 billion on November 10, 2017.
Between February 2016 and February 2017, Rite Aid’s revenues increased by $2.11 billion. The revenues rose from $30.74 billion in 2016 to $32.85 billion in 2017. There’s a lot of cash flowing through Rite Aid that might make somebody a lot of money if he can figure out how to capture it.
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There is one scary figure in Berkshire’s first quarter results and that’s cash and short-term investments. Why has Uncle Warren stashed $96.46 billion in the bank?
An obvious and frightening reason is that Buffett and crew think the U.S. economy is on shaky economic ground. They think something is about to give in the American economy, and when it does they plan to go shopping.
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Naturally this piques the interest of value investors, if eBay is an unfashionable company that makes money; it meets some classic Ben Graham criteria for a value bargain. That means we will need to ask the all-important question here: is eBay making money?
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That’s what makes it a widows and orphans stock, no matter what happens it will make money for the foreseeable future perhaps the next 10 years or so. This reminds me of another major Buffett investment; Walmart Stores Inc. (NYSE: WMT). Like Apple, Walmart has so much money $483.83 billion in revenues in June 2016; that it can survive what would be catastrophic losses for the average company several times over.
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Alphabet (NASDAQ: GOOG) is now so profitable; and so successful, that it has become very boring. Every quarter the company turns in a great earnings report – that looks much like the last one. Despite this redundancy, Google’s financial numbers are well worth reading. It is possible to learn a lot from those numbers because they are so good.
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