Berkshire's $37 billion Precision Castparts investment now yields engine parts shortages
Warren Buffett admits the 2016 deal was overpriced, but reports indicate a current shortage of essential turbine blades produced by Precision Castparts.
In 2016, Warren Buffett purchased Precision Castparts for $37 billion. During an interview at that time, Buffett stated the acquisition price represented a high multiple for Berkshire Hathaway. He expressed strong confidence in the company's CEO, Mark Donegan. In his 2021 shareholder letter, Buffett later clarified that he paid too much for the business. He described the metal components as fine but acknowledged he was overly optimistic regarding future earnings and his price calculations. Now, conditions have changed. Reuters reported a shortage of the products Precision Castparts manufactures. These items include castings made from liquid metal used to produce engine turbine blades. The parts are difficult to mass-produce.
