巴菲特于1965年首次控制了最初是一家服装制造商的伯克希尔，并继续将其转变为独一无二的企业集团。为什么这位94岁的传奇投资者还持有如此多的现金？Buffett observers believe that he is still patiently waiting for the right moment to make a "big elephant Trade" and that building a large Cash reserve is also beneficial for his successor.
Warren Buffett, who has long liked to Hold large amounts of Cash, will provide especially a lot of "dry powder" in 2025. $Berkshire Hathaway-B (BRK.B.US)$In fact, this is the largest accumulation of Cash in 34 years.
According to Oppenheimer, the Cash level of this Omaha-based Conglomerates is $325 billion, a historical high in absolute value, currently accounting for about 30% of Berkshire's total Assets, the highest proportion since 1990.
Buffett gained control of Berkshire, originally an Apparel Manufacturing company, in 1965 and continued to transform it into a unique Conglomerates. Why does this 94-year-old legendary investor still Hold so much Cash?
The most obvious explanation may be that he simply hasn’t found attractive areas to deploy large amounts of Cash in an expensive market.
According to Buffett's favorite overall valuation indicator - the ratio of total market value of US Stocks to Gross Domestic Product (GDP), the valuation of the US stock market has reached a historical high. The so-called "Buffett Indicator" has soared to a historical high of 209%, the last time this level was seen was when the stock market peaked in 1929.
Data from Oppenheimer shows that before the collapse of the Internet bubble in the early 2000s, the indicator peaked at 140%.
I think the market valuations are too high and there are not many attractive buy points," said Bill Stone, Chief Investment Officer of Glenview Trust Company and a long-term Shareholder of Berkshire Hathaway-B, when talking about Berkshire's cash reserves. "It's hard to find good companies at cheap prices."
Berkshire's cash reserves only increased after Buffett actively sold off his two major holdings, Apple and Bank of America, this year. For most of 2024, he has been in a selling mood, offloading Stocks worth 133 billion dollars in the first three quarters of this year.
As the owner of GECCO Insurance and Burlington Northern Santa Fe Railroads, Berkshire has just experienced a brilliant year, with its stock rising approximately 27%, the largest annual increase since 2021. Although Berkshire stopped repurchasing its own Stocks this year, it still achieved high returns.
Observers of Buffett believe that despite his advanced age, he is still patiently waiting for the right moment to make a "big elephant deal." Building a large cash reserve also benefits his chosen successor, Greg Abel.
"Big elephant deals" refer to large commercial transactions conducted between major institutions, usually valued at over 20 million British Pounds (approximately 0.185 billion yuan).
Analyst Kevin Heal from Argus Research stated in a recent report, "Part of the 325 billion dollars in cash will ultimately be used to invest in troubled companies, whether an Industry or individual companies, just like Berkshire did during the last economic crisis. This will also provide opportunities for its successors to leave their own mark when Buffett formally hands over power."
Editor/rice