Warren Buffett calls SPACs a ‘killer,’ make Berkshire less competitive

Warren Buffett warned investors that Berkshire Hathaway Inc. might not have much luck on striking deals amid the SPAC boom.

“It’s a killer,” Buffett said about the influence of special purpose acquisition companies on Berkshire’s ability to find businesses to buy. “That won’t go on forever, but it’s where the money is now and Wall Street goes where the money is.”

Buffett, 90, acknowledged the pressure from SPACs just as Berkshire reported Saturday that it had a near-record pile of cash at the end of March with $145.4 billion in funds. He also spent part of Berkshire’s annual meeting Saturday addressing the recent boom in retail and day trading. A lot of people have entered the stock market “casino” over the past year, he said.

“The gambling impulse is very strong in people worldwide and occasionally it gets an enormous shove and conditions lead to this place where more people are entering the casino than are leaving everyday,” Buffett said. “And it creates its own reality for a while and nobody tells you when the clock’s going to strike 12 and it all turns to pumpkins and mice.”

Charlie Munger, Buffett’s longtime business partner and a Berkshire vice chairman, chimed in on the subject at this year’s annual meeting, which was held virtually in his home state of California. He called it “shameful” on the part of professionals who took advantage of those gambling, with Buffett clarifying that it’s not shameful for the individuals who want to gamble, since it’s a “very human instinct.”

“It’s shameful what’s going on,” Munger said. “It’s not just stupid. It’s shameful.”