Warren Buffett-Led Berkshire Hathway's Ginormous $157B Cash Pile Is Nearing Levels Held By One Of Its Biggest Equity Bets

last year

Warren Buffett‘s Berkshire Hathaway, Inc. (NYSE:BRK) (NYSE:BRK) reported a robust 41% year-over-year surge in third-quarter operating earnings, but a widened net loss due to increased investment and derivative trading losses. Nevertheless, the company’s cash reserves have reached a new all-time high.

What Happened: In addition to substantial growth in operating profit, Berkshire’s cash holdings soared to a record $157.241 billion at the close of the September quarter, up from $147.38 billion at the end of the June quarter. The prior record was set in the third quarter of 2021 when cash holdings were at $149.2 billion.

Specifically, short-term Treasury bill investments on the company’s balance sheet totaled $126.40 billion by the end of the September quarter, up from $97.32 billion as of June 30, 2023.

During the third quarter, bond yields surged amid expectations that the Federal Reserve would prolong its rate-hike campaign. The yield on the benchmark 10-year Treasury note exceeded 5% on Oct. 23 for the first time since July 19, 2007.

Transcript

00:00 Let's kick it to what reported this weekend

00:01 because they're that special, right?

00:03 Berkshire Hathaway reported strong last quarter earnings

00:06 of 10.761 billion, marking a 40.6% increase

00:11 compared to the same period last year.

00:14 The company held a record amount of cash at 157.2 billion

00:19 by the end of September,

00:20 surpassing the previous high of 149.2 million

00:24 in Q3 of '21.

00:26 Buybacks also slowed down as Berkshire Hathaway shares

00:31 are definitely, I'm sorry about that, I just gotta,

00:35 as shares in the quarter totaling around 7 billion

00:38 over the first nine months of the quarter of the year.

00:42 - Berk will trade off its earnings to a certain extent,

00:45 but remember, it's just a big,

00:47 basically just a big closed end fund.

00:49 So it's never gonna move the needle significantly.

00:51 What I will say is Berk has had an incredible rally.

00:54 And if you think about the 50% retracement

00:57 of the recent move, 373 down to 3.3.

00:58 - Yep, just put it on there, yep.

00:59 - We just got it back in five days, man.

01:02 I mean, you coming and buying it now?

01:04 You coming and buying it this morning?

01:06 'Cause Warren talked a little bit on the weekend.

01:09 I think it's a selling opportunity and Berk, sorry.

01:11 And again, long-term, Berkshire Hathaway,

01:14 Warren Buffett's been good,

01:15 but the only thing is long-term, Berk.

01:17 Long-term, Warren doesn't exist with Berk.

01:19 Is there a Warren Buffett premium?

01:21 Like what happens when he eventually does die?

01:23 Is his successor is gonna be as good?

01:25 Because he's 90 years old,

01:26 his partner's almost 100, I believe.

01:29 I mean, what happens-

01:30 - Charlie Munger, he's a Michigan guy.

01:31 - How old is Charlie?

01:32 - How much cash did they have, two on hand?

01:36 - I meant 157.

01:38 So they've gone up and up and up and up

01:41 every single year since like-

01:42 - They're buying nothing.

01:43 - Since like what, like 2007 or 2011?

01:47 - Why is the greatest investor of all time hoarding cash?

01:52 - You've gotta ask yourself that question.

01:53 - That needs to be a big question.

01:55 That needs to be a big question.

01:56 - You've gotta ask yourself that question too.

01:57 The same reason I'm hoarding cash is one,

01:58 I'm getting 5.75% to hoard cash

02:01 and in the stock market's long-term performance

02:03 is eight over time.

02:05 So I mean, it's pretty good compared to what stock market

02:08 does over the course of the long-term.

02:10 Two is I still believe stocks are incredibly overpriced

02:13 for the environment that we're gonna go into in 2024.

02:15 But right now I'm bullish.

02:17 So you stick with us because we're gonna go bullish.

02:20 We were trading show.

02:21 So we go long short, long short, long short,

02:23 bullish bearish, bullish bearish.

02:24 That's what we do.

02:25 It's my job.

02:26 I make my living calling turns.

02:28 I make my living trading.

02:29 You know, I was bearish last three, four weeks.

02:31 You know that.

02:32 And I turned bullish when the TLT got back up

02:34 above 85 three days ago.

02:36 And we were talking about stocks being oversold

02:38 even before that.

02:39 But, and we got seasonally facts here happening

02:41 and Ryan Dietrich letting us know last five days.

02:43 - Before we go to Tim, I just want,

02:45 I got a, remember I was talking about Apple

02:48 and their cash position, right?

02:51 What do you think their return on invested capital

02:54 was last quarter?

02:56 - For Apple?

02:58 - Yeah.

02:59 - 6%, 5%?

03:02 - Well, and this is coming from-

03:05 - This is the return on their cash?

03:05 - Cameron Dawson, 53%.

03:09 - This is confusing.

03:10 Yeah, but that's not the cash.

03:12 The cash, if they're getting 53%,

03:14 there's something in it.

03:14 - Invested capital.

03:16 - They're investing capital on their own company

03:19 is what this is.

03:19 So they're talking about, you get your CFA hat

03:21 back on there, obviously.

03:24 You're talking about invested capital

03:26 back in their company.

03:26 So the return on the money that they have invested

03:29 in their company.

03:30 The margins on Apple, what are their margins?

03:32 I mean, it's not like it's 53% is mind boggling here.

03:36 Apple's margins are absolutely incredible.

03:38 When they sell you this, the $1,500 iPhone,

03:41 it costs them like 600 bucks to produce that.

03:43 So what's their margins?

03:44 Let's go to Luck Money, Mitch.

Warren Buffett-Led Berkshire Hathway's Ginormous $157B Cash Pile Is Nearing Levels Held By One Of Its Biggest Equity Bets

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