“Our elephant gun has been reloaded and my trigger finger is itchy,” Warren Buffett declared this weekend in his annual letter to Berkshire Hathaway shareholders.Buffett also reiterated a pro-American stance in his latest letter: “Money will always flow toward opportunity, and there is an abundance of that in America,” the famed investor writes.

But those statements should not be interpreted as a market call, says hedge fund manager Jeff Matthews, author of Pilgrimage to Warren Buffett’s Omaha.

“I don’t think he’s saying ‘the stock market is screamingly cheap and I want to get ready to go,'” Matthews says. “He’s just staying, ‘we’ve got a ton of cash and we can do what we want.'”

It may not weigh quite a ton, but Berkshire Hathaway had $38 billion of cash on hand at the end of 2010. Matthews thinks Buffett would be willing to do another mega-deal like the $44 billion Burlington Northern acquisition in late 2009. “If another Burlington Northern walked in the door and [Buffett] could spend $30 or $40 billion overnight like he did on Burlington, he’d feel comfortable doing that now,” he says.

House of Bull

Amid all the speculation over what Buffett might buy, it’s notable where Buffett has been putting Berkshire’s money lately: U.S. Housing.

“A housing recovery will probably begin within a year or so. In any event, it is certain occur at some point,” Buffett writes.

Putting Berkshire’s money where his mouth is, the “Oracle of Omaha” detailed the firm’s housing-related expenses, featuring:

  • — MiTeck: Five “bolt-on acquisitions” in the past 11 months.
  • — Acme: Acquired the leading manufacturer of brick in Alabama for $50 million.
  • — Johns Manville: Building a $55 million roofing membrane plant in Ohio.
  • — Shaw: Planned spending of $200 million in 2011 on U.S.-based plant and equipment.

“Buffett doesn’t spend money unless he thinks he’s going to make money,” says Matthews, suggesting the housing bullishness is “interesting because that didn’t happen last year [and] didn’t happen the year before that.”

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