Buffett Has Finally Found Something To Spend Berkshire's Cash On

Berkshire Hathaway's cash pile is finally dropping, as Warren Buffett has finally found something appetizing to spend the money on:

Short-term U.S. Treasury Bills

If you check out the most recent (Q1/2023) consolidated balance sheet of Berkshire Hathaway, one number will pop out right away.

As of March 31st, 2023, Berkshire Hathaway owned over $100 billion ($103.87 billion to be exact) of short-dated US Treasury bills.

Throw in another $3.6 billion of US Treasury Bills with maturities of less than three months, and you have a $105 billion+ pile of Berkshire's money that is sitting in US bonds.

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The reason for this move is obvious - US Treasury bills are actually paying something significant, as the "easy money" days of rock-bottom interest rates appear to be over.

In fact, Buffett recently stated that he anticipates that Berkshire will make roughly $5 billion from its US Treasury bill position over the next 12 months.

$5 billion in interest, courtesy of the US government.

Compare this to a number of years ago, when US Treasury bills were paying just a FRACTION of that amount.

There are only a handful of companies that will make $5 billion over the next year, and Berkshire Hathaway will be making this just from their US Treasury bill holdings.

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Buffett's position illustrates a key point - when interest rates rise, the hunger for equities diminishes, as yield can be generated in bonds.

When interest rates are near 0%, equities are pretty much the only option in town.

Now that US Treasury bills are paying close to 5%, Buffett likely won't receive as much criticism about the company's ever-growing cash pile, as a 5% return is pretty nice!

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This probably won't last forever, but you can be sure that Buffett will take advantage for as long as he can.


Filed under: General Knowledge