‘We only swing at pitches we like,’ billionaire investor says
Berkshire Hathaway’s cash holdings are at record levels and rising, reflecting the difficulty of finding the kind of value investments that have defined billionaire Warren Buffett’s conglomerate.
“We only swing at pitches we like,” Buffett told shareholders at Berkshire’s annual general meeting here Saturday.
Cash, cash equivalents and short-term Treasurys at Buffett’s group totaled $189 billion at the end of March, up 13% from the end of 2023.
“It’s a fair assumption that they’ll probably be at about $200 billion at the end of this quarter,” Buffett said.
That would make a mountain of cash the size of The Walt Disney Co., which has a market capitalization of about $208 billion, or McDonald’s, which weighs in around $195 billion.
Sales of some of Berkshire’s top holdings have added to the pile. According to quarterly disclosures Saturday, Berkshire had unloaded about 13% of its shares in Apple, one of its biggest positions. The company had also trimmed about 2% off its stake in Chevron.
As for its stake in Paramount Global, “we’ve sold it all,” Buffett said.
Factoring into these moves is Buffett’s view that the U.S. likely will raise taxes to try to fill deepening fiscal deficits. But his opinion of Apple remains undiminished. While Buffett favorites Coca-Cola and American Express are “wonderful businesses,” the iPhone maker is “an even better business.”
Asked why Berkshire doesn’t deploy some of its firepower, Buffett was guarded.
“We’d love to spend it, but we won’t spend it unless we think they’re doing something that has very little risk and can make us a lot of money,” he said.
A combination of high interest rates and a hot stock rally has raised the bar for Berkshire’s strategy of picking undervalued stocks. Three-month Treasury bills are yielding around 5.4%. Berkshire’s interest income from short-term U.S. debt has exceeded dividend income from stockholdings for three consecutive quarters, since July-September 2023.
Meanwhile, the S&P 500 is up 7.5% since the beginning of the year and is closing in on an all-time high reached at the end of March. U.S. equities, Berkshire’s primary investment target, haven’t experienced a full-blown correction since fall 2022.
By contrast, Buffett said there was a strong case for investing in Japanese trading houses, including Mitsubishi Corp. and Itochu.
“That was just overwhelmingly compelling,” he told shareholders. “We spent a year, and we got a few percent of our assets in five very big companies.”
But Buffett acknowledged the difficulty of venturing beyond the U.S. market. Asked whether he was interested in Indian equities, he said there may be unexplored opportunities.
“The question is: Do we have any advantage in either insight into those businesses or contacts that will make possible some transaction?” he said.
