Uncle Warren/Berkshire Are Holding Record Amounts of Cash

Good morning,

On Monday, Berkshire Hathaway posted its quarterly earnings. The loss posted was noteworthy in itself, but was far from the main takeaway. Apple’s poor Q3 performance and following price drop would have put a major drag on Berkshire’s earnings, as Apple makes up 20% of Brk-A and Brk-B.

Cash is King

In the past quarter, Warren and Co increased their cash position by 22%. We have seen some growth over the past week in the market but seeing such a liquidation by one of the all-time greats begs the question: What does he see that no one else does?

Ultimately, this isn’t anything new as Berkshire has been selling stock all year, to the tune of $38Billion year to date.

Guarantees are too Good

On the other hand, Berk has been buying up bonds like they are going out of style, now holding $97billion of T-Bills (short term bonds). With rates pushing 5%, it is very difficult for Warren (and many others) to see value in a non-guaranteed asset over the near term, especially with weak-at-best jobs data that came out on Friday. This suggests that he sees at the very least stagnation in the short term, with a major buying opportunity in the coming months to year.

Time will tell.

Have a great week!

Ryan