Boeing (NYSE: BA) may to Warren Buffett due to its quasi-monopoly status and strong brand, similar to companies like Apple (NASDAQ: AAPL) and Coca-Cola (NYSE: KO) that he has favored in the past. Despite recent brand damage, Buffett believes strong management can restore value. With around $170 billion in cash, Buffett is actively seeking large investment opportunities, and Boeing’s size and liquidity make it a suitable target. Additionally, Apple’s recent sales figures have contributed to this cash reserve. Despite Boeing’s recent production and delivery issues, its potential for improvement and rising air travel demand could present a valuable investment for Buffett.
Transcript:
Well, Boeing has one thing that Buffett likes, and that is he likes things that aren’t called monopolies, but they are monopolies. Not like Apple as much as he used to, but he liked Apple for that reason. Coke is another great example. He loves branded companies. If a brand has been damaged a little, usually he thinks that they’ve got the right management, they can sort of get that back to where it used to be. The other thing, though, is that Buffett has a lot of cash burning a hole in his pocket. He doesn’t have anything to do with it right now. Right. Well, like we wrote about recently, when the Apple sales were… given to the public, he has now about $170 billion in cash, which means, of course, three to six-month treasuries that he’s getting 5% on. And he expected that it could climb to as much as $200 billion by the summer. Yeah, so I would think that he and his lieutenants are shopping very, very hard for opportunities. One of the problems with having that much money is you can’t do medium-sized deals. It’s just the cash is building up so fast that putting money into six medium-sized public companies that have market caps of – you know, $50 billion, it doesn’t solve this problem. 10% of one of those companies, there have to be a lot of them. Boeing does fit the bill in terms of its size. The fact that the stock, you know, it trades pretty much like water. I mean, it’s very liquid. And it’s the kind of thing where if there’s an improvement in the next two or three years, he once again looks like a genius. Yeah, and air travel has picked up. I mean, part of Boeing’s biggest problem is they haven’t been able to give deliveries to airline companies around the world that have been waiting on deliveries because of the constant demand problem flow with the 737 MAX and all these other issues. The Dreamliners had issues and then you mentioned not that everybody’s buying rocket ships from them but that’s just another thing that puts a little stick them to it. And the stock could get cheap enough where he really could see that there’s some real deep value because he’s ostensibly he’s a value guy.
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