26 Feb COTW: Berkshire Hathaway's Growing War Chest
The chart below can be downloaded here.
Berkshire Hathaway is now one of the largest holders of short-term U.S. Treasury bills in the world, having amassed over $100 billion worth ($116 billion including cash). According to the WSJ, that is more than China and the U.K. hold. More than half of this enormous “cash” war chest was accumulated in just the last 5 years. Aside from the obvious challenge of putting such a massive amount of capital to work, Berkshire Hathaway Chairman Warren Buffett has also publicly stated that he has been unable to find acquisition candidates at “sensible purchases prices”.
Another way to think about this is to frame the additional $30 billion of cash accumulated by Berkshire Hathaway over the last year relative to the $36 billion generated from its operations. Berkshire is allocating 83% of marginal cash flow to short-term Treasuries and cash proxies that yield very little right now, but may be used as a source of liquidity in the future.
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