Warren Buffett eyes 'elephant-sized acquisition,' but says prices are 'sky-high'

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U.S. business magnate Warren Buffett told stakeholders in a letter released on Saturday that he sets sights on "an elephant-sized acquisition" for his Berkshire Hathaway Inc., but cited high prices as a discouraging factor.

"In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will permanently own," the billionaire and CEO of Berkshire wrote. "The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects."

"That disappointing reality means that 2019 will likely see us again expanding our holdings of marketable equities. We continue, nevertheless, to hope for an elephant-sized acquisition," he added.

Berkshire maintains some 112 billion U.S. dollars in cash, U.S. Treasures and related holdings as of the fourth quarter of 2018, according to the letter.

"At times, our stock will tumble as investors flee from equities," Buffett wrote. "But I will never risk getting caught short of cash," the 88-year-old investor said.

Berkshire was hit by a staggering net loss of 25.4 billion dollars in the fourth quarter, down from a 32.6-billion-dollar profit in the same period the previous year.

That is due to a new accounting rule that asks public companies to account for unrealized gains or losses in stocks when reporting their net income. In that regard, the company has 20.6 billion dollars in unrealized losses from its investment portfolio.

"Our advice? Focus on operating earnings, paying little attention to gains or losses of any variety," Buffett said.

Berkshire earned 4 billion dollars in 2018 utilizing generally accepted accounting principles (GAAP), according to the letter. 

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