Warren Buffett, the legendary investor and chairman of Berkshire Hathaway, is entering 2025 with a record cash position at the Omaha-based conglomerate. As of December 2024, Berkshire Hathaway holds $325 billion in cash. This accounts for about 30% of the company’s total assets, the highest percentage since 1990.
Buffett, who has controlled Berkshire since 1965, is known for his preference for holding large amounts of cash for strategic flexibility. However, the current cash hoard of $325 billion is unprecedented in the company’s history. Analysts suggest that Buffett is struggling to find attractive investment opportunities in a market that he believes is overvalued.
The “Buffett indicator”—the ratio of the total market value of U.S. stocks to gross domestic product—has soared to an all-time high of 209%, a level last seen just before the 1929 market crash. Bill Stone, chief investment officer at Glenview Trust Company and a longtime Berkshire shareholder, commented, “It is tough to find his kind of quality companies on the cheap.”
Berkshire’s sizable cash reserve has grown partly due to significant sales of its two largest holdings, Apple and Bank of America. In the first three quarters of 2024, Berkshire sold $133 billion worth of stock.
Buffett’s strategic cash reserve grows
Despite these sales, Berkshire Hathaway had a strong performance in 2024. The company’s shares rose by about 27%, marking its biggest yearly gain since 2021.
Even with these gains, Buffett decided against buying back the company’s own stock. There is speculation that Buffett, despite being 94 years old, is preparing for an “elephant-sized” acquisition when the market conditions are right. Analysts believe this would indicate strategic patience, a hallmark of Buffett’s investment philosophy.
Kevin Heal, an analyst at Argus Research, noted, “Some of the $325 billion in cash will eventually be used to invest in a ‘distress’ situation, either an industry or individual company similar to what BRK did during the last economic crisis. This will also provide an opportunity for the successors to make their own mark when Mr. Buffett officially hands over the reins.”
Buffett’s strategy may also serve to bolster his chosen successor, Greg Abel, giving him a robust financial base to manage future investments and acquisitions.
This strategic cash reserve positions Berkshire Hathaway well for future opportunities, and investors are eagerly watching to see how Buffett and his successors will deploy it.
