Warren Buffett tops up cash pile to $128 billion
The family office of prolific US investor Warren Buffett (pictured) has conserved $128 billion in cash in its third quarter, up from $122.4 billion in the previous quarter, backing up a recession-warning trend revealed in The Global Family Office Report 2019.
Berkshire Hathaway also reported a record operating profit of $7.8 billion for its third quarter, up 14% on the same period in 2018, from its activities in insurance and reinsurance, utilities and energy, freight rail transport, manufacturing, retailing and services.
The Nebraskan holding company repurchased $700 million worth of stock in the quarter, bringing its total buyback for the year to $2.8 billion, but analysts questioned why it had not bought back more shares. Berkshire has not made a major acquisition since early 2016 for the manufacturer Precision Castparts for $32 billion.
Nearly half of family office principals surveyed by Campden Research said they were preparing for a recession. In preparation, 42% said they were increasing their cash reserves and 22% were reducing their investment leverage exposure.
“We have been getting out of equities and putting money into bonds and real estate,” a family member of a North American single family office told Campden researchers.
“We are also putting money aside to make purchases if there is a crash.”
Solvay shakes up structure and management against headwinds
Family controlled Belgium chemicals company Solvay says it will deliver up to €350 million ($385 million) in cost savings as part of its new strategy to rally growth, cash and returns.
After it restructured its top tier of management, Solvay will streamline its advanced materials and specialty chemicals businesses into three mandated segments: materials, chemicals and solutions. Effective management of pension liabilities, debt and working capital intended to generate about €500 million in extra cash over the next five years.
The Brussels-based company employs 24,500 staff in 61 countries and clients include Boeing, Airbus, Intel and Apple. Underlying earnings fell 1.8% to €601 million ($662 million) in its third-quarter results due to “the effects of persistent low demand in the automotive, electronics, and oil and gas markets.”
Solvay’s main shareholder was Solvac SA, with a more than 30% stake. Solvac has about 13,000 shareholders. Among them, more than 2,000 were related to the founding families of Solvay and of Solvac. Those family members held 77% of the shares of Solvac.
Ernest Solvay and his brother Alfred Solvay founded their eponymous business to produce sodium carbonate near Brussels in 1863. Descendant Nicolas Boel (pictured) has chaired the board since 2012. He won the Top Family Business Leader Award at the CampdenFB European Families in Business Awards in 2014.
Hays family tout capital reinvestment and the personal touch in Thomas Cook takeover
Family business Hays Travel aims to drive holidaymakers from online to its staff in bricks and mortar stores for bespoke travel deals.
Husband and wife team John Hays, founder and managing director, and Irene Hays, owner and chairwoman, of the Hays Travel Group, earned significant goodwill from employees, the public and media since they bought the entire property portfolio of the collapsed UK travel giant and saved 2,500 jobs in October.
“We are independent, we will sell every holiday and we will tailor-make holidays, whereas Thomas Cook really were hamstrung by being part of an airline and a tour operator,” John Hays told the BBC.
The couple (pictured) said their business approach was different to Thomas Cook. Their salary was not the highest at Hays Travel.
“We haven’t drawn a dividend for quite a lot of years now so all the money that we make we can put back into the business. It’s a very different form of capitalism”
Despite major brands closing outlets on the UK’s high street due to changing consumer habits and high rents, the family saw the personal touch as a point of difference at their newly expanded group.
“We have always embraced emerging technologies,” Irene Hays said.
“What we do is drive traffic to the high street from our social media platforms, from our website, so many, many people will look at the cost and then go into a shop and see what we can do for them.”