Warren Buffett isn't usually one for hoarding cash. So what's he planning to do with Berkshire Hathaway's record $325 billion in cash?
A pile of money that vast is enough to outright buy 476 individual companies in the S&P 500 at the market value, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. The largest S&P 500 company he could entirely buy is health care firm AbbVie valued at $304 billion.
He could also buy the rest of T-Mobile US that Berkshire Hathaway doesn't already own. T-Mobile US is valued at roughly $280 billion. And just holding 10-year Treasuries yielding 4.43% would generate $1.1 billion a month.
Berkshire Hathaway's Surging Cash Pile
Speculation is heating up around Berkshire Hathaway's record large amount of cash and cash equivalents. At roughly $325 billion, that's nearly double the $167.6 billion balance at the end of last year. And it's up more than 400% from just 10 years ago.
Much of the cash accumulated as a result of Berkshire Hathaway selling a large portion of its stake in Apple. Berkshire Hathaway sold 389 million shares of the gadget maker in June of this year. That cut its position by nearly half and raised proceeds of more than $80 billion.
And since Berkshire Hathaway sold Apple, shares of the iPhone maker rallied higher along with the rest of the S&P 500. Some think Berkshire's enormous pile of cash is a drawback.
"Weighing BRK's growing cash hoard of over $325 billion with broadly tepid third-quarter results and the absence of any share buybacks in the third quarter, we think the shares lack a near-term catalyst," said Cathy Seifert of CFRA.
Berkshire Hathaway's $1 Trillion Valuation
Berkshire Hathaway's problem is being too much of a good thing. The company is now one of eight S&P 500 firms worth $1 trillion or more.
And that means it simply takes more of a bet to even move the needle for the massive company's profit and revenue. Allowing hundreds of billions of cash to sit idly on the balance sheet doesn't help much either.
Already, the Nasdaq 100 index outperformed Berkshire Hathaway in the past five, 10, 15, and 20-year price returns, "by a wide margin," says Nicholas Colas of DataTrek Research.
"We have a lot of respect for Warren Buffett; no doubt he is one of – if not the – best money managers of all time," Colas said. "That said, U.S. large cap techs' long-run performance tells a clear story about the power of disruptive innovation."
Most Valuable S&P 500 Companies
Berkshire Hathaway is one of them, and has enough cash to buy other big firms
| Company | Ticker | Market value now ($ trillions) |
|---|---|---|
| Nvidia | NVDA | $3.6 |
| Apple | AAPL | $3.4 |
| Microsoft | MSFT | $3.2 |
| Alphabet | GOOGL | $2.2 |
| Amazon.com | AMZN | $2.2 |
| Meta Platforms | META | $1.5 |
| Tesla | TSLA | $1.1 |
| Berkshire Hathaway | BRKA | $1.0 |
| Broadcom | AVGO | $0.8 |
| Eli Lilly | LLY | $0.7 |
