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Buffett's Losing Streak Could Corner Him Into Doing Something He Would Hate: Paying A Dividend To Berkshire's Shareholders

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Buffett's Losing Streak Could Corner Him Into Doing Something He Would Hate: Paying A Dividend To Berkshire's Shareholders
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The best of the best aren't expected to win every time, and that applies universally, especially in corporate America. Consider for instance billionaire investor Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) who proposed an acquisition of a bankrupt utility company called Oncor, which is owned by Energy Future Holdings, for $9 billion.

Buffett was outbid by Sempra Energy, which offered $9.45 billion to acquire Oncor. Just a few months ago Buffett tried to acquire Unilever NV (ARD) (NYSE: UN) — unsuccessfully. After two notable losses in 2017 alone, Buffett is now in an "unusual situation." He's on the losing side, Gadfly's Tara Lachapelle commented.

Buffett is a man who tends to get what he wants when he wants and how he wants with few if any bumps along the way, Lachapelle continued. But Buffett is also a simpler man by Wall Street's standards and doesn't like bidding wars or conflict. Nevertheless, Bekshire's cash hoard is within striking distance of $100 billion, which means the "Oracle of Omaha" is facing pressure to put the cash to use.

Oncor was an ideal investment for Berkshire, of which the market approved, Lachapelle added. But now this raises the serious possibility of Buffett doing something he would hate: paying investors a dividend.

Buffett doesn't like paying dividends because he believes he can find super returning acquisitions that perform better. However, as the cash hoard grows by the day, Buffett may feel "more compelled" to bite the bullet and return money to shareholders.

Granted, doing so would be seen as an "admission of defeat" but not many "octogenarians are spending their time searching for $50 billion-plus acquisitions," Lachapelle concluded.

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