Berkshire Hathaway has been so aggressive in buying Treasury bills that the conglomerate controlled by Warren Buffett now owns 3% of the entire Treasury market, according to JPMorgan Chase. JPMorgan fixed income strategists said in a report: “Berkshire Hathaway’s Treasury bond position has increased significantly over the years and now accounts for a larger market share than international organizations, stablecoin issuers, offshore money market funds or local government investments. The pool is larger. Wall Street banks estimate Berkshire Hathaway’s Treasury holdings at $158 billion, or 3% of all short-term government notes outstanding, as Berkshire has a record amount of cash. $189 billion), the “Oracle of Omaha” emerged as one of the most prominent investors able to take advantage of higher interest rates. With short-term interest rates topping 5%, his massive cash hoard, which had been an area of concern when interest rates were near zero, is now generating handsome returns for Berkshire. Buffett buys 3-month and 6-month Treasuries every Monday in the weekly Treasury auction, sometimes in increments of $10 billion. The government sells Treasury bills with maturities of four to 52 weeks. Berkshire has a huge presence in the insurance space, always maintaining ample liquidity and prioritizing safety over returns when allocating excess cash into short-term instruments. Cash Is Attractive Buffett believes that short-term Treasury bills are the standard by which other values are measured—a sharp rise in interest rates can actually reduce the present value of any future earnings. The Berkshire CEO said he doesn’t see anything else attractive right now. “I’m not on a hunger strike or anything like that. It’s just that things are not attractive,” Buffett said at Berkshire’s annual meeting in early May. After keeping interest rates near zero for most of the past 15 years, the Federal Reserve in March 2022 began taking its most aggressive action since the 1980s, raising borrowing costs to combat high inflation. Since the Federal Reserve last raised interest rates in July 2023 and raised the overnight federal funds rate to its highest level in more than two decades, the federal funds rate has been between 5.25% and 5.50%. The investing legend recently said he finds cash more attractive compared to other assets, especially stocks. Berkshire’s cash position could exceed $200 billion by the end of the second quarter, he added. “I don’t mind building a cash position at all under the current circumstances,” he told the Berkshire Hathaway shareholder meeting. “I think when I look at the alternatives that are out there in the stock market and I look at what’s going on in the world When it comes to composition, we find it very attractive.”
