Warren Buffett, who has long been an advocate of holding large amounts of cash, will have an especially large war chest at Berkshire Hathaway in 2025 — the largest in 34 years, in fact reserve. The Omaha-based conglomerate’s cash level reached a record high of $325 billion in absolute terms and now accounts for about 30% of Berkshire’s total assets, the highest proportion since 1990, according to Oppenheimer data. . Buffett first took control of Berkshire in 1965, which began as a clothing manufacturer, and later transformed it into a unique conglomerate. Why does the 94-year-old legendary investor hold so much cash? The most obvious explanation may be that he simply hasn’t found an attractive area that would allow him to deploy large amounts of cash in expensive markets. Using Buffett’s favorite measure of overall valuation: the ratio of the total market capitalization of U.S. stocks to gross domestic product, the “Buffett indicator” soared to a record high of 209%. Market valuation has reached a historical proportion. The last level was in 1929. market peak. Before the dot-com bubble burst in the early 2000s, the metric peaked at 140%, according to Oppenheimer. “I think it’s a valuation issue and a lack of attractive acquisitions,” Bill Stone, chief investment officer of Glenview Trust and a longtime Berkshire Hathaway shareholder, said of Berkshire Hathaway’s cash pile. Opportunity. “It’s hard to find a quality company like his at a cheap price. Berkshire’s cash pile only grew after Buffett this year aggressively sold off large stakes in his two largest companies, Apple and Bank of America. He spent much of 2024 in a selling mood , which sold $133 billion worth of stock in the first three quarters of the year BRK.A YTD Berkshire Hathaway Inc., the owner of Geico insurance company and BNSF railroad company, is wrapping up a stellar year with its shares rising by about At 27%, it was the biggest annual gain since 2021. Berkshire Hathaway stopped buying back its own shares but still delivered high returns this year, Buffett watchers say, despite the investor’s advanced age. But he is patiently waiting for the right moment to complete an “elephant-sized” deal. Building a war chest would also benefit his chosen successor, Greg Abel. Kevin Heal, an analyst covering Berkshire Hathaway’s businesses at Argus Research, said: “Some of the $325 billion in cash will end up investing in ‘distressed’ businesses.” industries or individual companies, as Berkshire Hathaway did during the last economic crisis. “It would also provide an opportunity for Mr. Buffett’s successor to make his mark when he formally hands over power. “
