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Berkshire has almost all of their cash in short term treasury bills. It's a cash equivalent, because you don't want to keep 100bn in a checking account, and it
by gizmo 7y ago
Berkshire has almost all of their cash in short term treasury bills. It's a cash equivalent, because you don't want to keep 100bn in a checking account, and it does get hurt by inflation. But that's OK, because making a purchase when the time is right will more than make up for it. Cash is still king, in Buffet's world.
- H8crilA 7y agoI'd just add that in addition to that $128B in liquid Treasury securities (which is what "cash" means when we talk about such large amounts) they also have about $103B debt that cancels their net cash-debt position to about $25B. The debt has long maturity, though, so most of the cash can be deployed immediately. Also, Buffett applies something like the Taleb's "barbell method" to his holdings: he never buys high grade corporate bonds. It either has to be something "distressed", a convertible, a preferred stock, warrants, common stock well below intrinsic value, best if they call him and beg him to buy, i.e. something with high potential returns, or "pristine" and boring assets, like govt securities. As he says himself - when things get bad everything freezes. In 2008 even Berkshire couldn't get credit.
- sunstone 7y agoMost of Berkeshire's debt is associated with their utility businesses which have very low risk and low margins because of safe multi-decade contracts.