Warren Buffett, the CEO of Berkshire Hathaway, has nearly 50% of the company’s investable portfolio in short-term Treasury bills. This move reflects Buffett’s belief in maintaining liquidity and prioritizing safety over yield. By the end of the second quarter of 2024, Berkshire Hathaway had increased its Treasury holdings by $94 billion.
The company now holds $277 billion in Treasury bills and cash. Buffett’s preference for short-term Treasury bills is rooted in their lower interest-rate risk than longer-dated government bonds. Short-term Treasuries mature within a year, typically within six months or less.
Berkshire’s core operations have generated an operating cash flow of roughly $12 billion to $13 billion each quarter. The company will also collect approximately $3.5 billion in interest from its current Treasury holdings.
Buffett’s cautious treasury investment strategy
Buffett has been selling off other significant holdings in his portfolio. He invested $36 billion in Apple between 2016 and 2018 but has recently sold a portion of this stake. Buffett’s once-large stake in Bank of America has also been trimmed, with $7.2 billion worth of shares sold since the start of the third quarter.
Despite his selling spree, Buffett’s continued accumulation of Treasury bills highlights his cautious stance in the current investment climate. Market experts stress that individual investors should approach this differently, considering their own risk tolerance and investment goals. Short-term Treasury bills offer a secure avenue while Berkshire evaluates the best opportunities.
This reflects Buffett’s strategic prudence during uncertain market periods. Individual investors should consider diversifying their portfolios in line with their own circumstances. Resisting the urge to mimic Buffett’s strategies directly is essential, as his decisions align with managing a $1 trillion conglomerate with assets exceeding $600 billion.
