Warren Buffett’s Berkshire Hathaway has set a new record with its cash pile, which grew to an astounding $157 billion in the last quarter. This amount surpassed the conglomerate’s previous record of $149 billion in late 2021 and even exceeded the market capitalization of Disney, currently worth $156 billion.
The increase in Berkshire’s cash and Treasury bills often indicates that Buffett and his team struggled to find attractive investment opportunities in the stock market or through acquisitions. According to Berkshire’s third-quarter earnings report, they only spent $1.7 billion on stocks during the quarter, while selling about $7 billion worth, resulting in a net selling of $5.3 billion.
Furthermore, they allocated only $1.1 billion to stock buybacks, which is $300 million less than the previous quarter and significantly lower than the $4.4 billion spent in the first quarter. The rise in Berkshire’s stock price, which increased by approximately 13% in the six months leading up to September, likely contributed to the slower pace of buybacks. Buffett and his business partner, Charlie Munger, only repurchase their company’s stock when they believe it is significantly undervalued.
Berkshire Hathaway is often seen as a microcosm of the US economy due to its vast scale and diverse range of subsidiaries. In the last quarter, the company’s operating earnings surged 41% year-on-year to nearly $11 billion, primarily driven by the improvement in its insurance business and a $183 million contribution from the recently acquired Pilot Travel Centers. However, weaknesses were observed in the BNSF Railway and Berkshire Hathaway Energy divisions.
This year, Buffett and his team have taken a more conservative spending approach. In 2021, they invested a record $68 billion in stocks, with a net investment of $34 billion. They also made a $12 billion acquisition of Alleghany and repurchased almost $8 billion of their own stock. In contrast, during the first nine months of this year, Berkshire sold $24 billion of stock on a net basis but only repurchased around $7 billion.
It is worth noting that Buffett and his team have leveraged higher interest rates to their advantage. While their total cash and cash equivalents decreased by 21% to $26 billion between January and September, their short-term Treasury holdings increased by 36% to $126 billion.
Overall, Warren Buffett’s Berkshire Hathaway has accumulated a formidable cash pile, reflecting the company’s cautious approach to finding attractive investment opportunities. With its influential position in the US economy, Berkshire’s financial decisions continue to be closely watched by investors and analysts alike.
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