Aniket PujariNo major company is better positioned than Berkshire Hathaway in the wake of the stock market rout.
Berkshire was sitting on about $318 billion of cash and equivalents at year-end 2024, nearly double the total at the end of 2023.
A big question is whether CEO Warren Buffett will invest a chunk of that money in the stock market now that the S&P 500 has given up its gains since the election and is down 4% for the year.
Many blue-chip stocks are down 15% or more from their 52-week highs, including most of the Magnificent Seven stocks that led the market in 2023 and 2024.
Judging from Buffett’s behavior over the past few years, it may take more of a downdraft to get him to take a plunge. The last time Berkshire aggressively bought stocks—including Occidental Petroleum—was in early 2022 when the S&P 500 was 20% below current levels.
Buffett, 94, has been conservative on investing since 2020 and has built cash at Berkshire for most of the past five years.
Berkshire was a net seller of $134 billion of stocks during 2024 and a net seller of $34 billion in 2023. It was a net buyer of $34 billion in 2022, according to its 10-K reports for those years.
Buffett sold two-thirds of Berkshire’s Apple stake—some 600 million shares—during 2024 at what Barron’s estimates was an average price of about $185 a share, appreciably below the current price of $227. Berkshire sold over 30% of its stake in Bank of America at an average price of about $41 last year, just above its closing price Monday of nearly $40.
Investors will get a read on Berkshire’s investment activity when it reports its first-quarter earnings in early May.
Investors are thrilled about Berkshire’s balance sheet and its earnings power—which were on display when the company recently released its fourth-quarter results.
Berkshire’s Class A shares are up 9% so far this year, way ahead of the S&P 500 index, which is down 4%.
The Class A stock rose 0.3% Monday to about $745,000 while the B shares gained 0.3% to $497.10. The stock continues to demonstrate its defensive characteristics as the S&P 500 was down 2.7% Monday.
Berkshire’s operating profits after taxes rose 70% in the fourth quarter to $14.5 billion—although the gain was less excluding one-time currency gains. Yearly operating profits rose more than 25% to $47 billion.
Berkshire has by far the largest cash holding of any U.S. company—Alphabet has $95 billion offset by some $11 billion of debt. Apple has $141 billion of cash and about $97 billion of debt.
It isn’t easy to peg Berkshire liabilities that offset its cash. Berkshire’s parent company debt ended 2024 at $21 billion plus there are large insurance liabilities.
Even with these offsets, Berkshire is sitting a huge amount of cash and equivalents—mostly Treasury bills. To arrive at a $318 billion figure for cash, we subtracted a liability for T-bills bought around year-end of nearly $13 billion from the total cash figure and we didn’t include cash at some of Berkshire’s subsidiaries.
However, it is calculated, Berkshire has enormous liquidity and that puts Buffett in a great position if the market turmoil persists.
Write to Andrew Bary at andrew.bary@barrons.com
