Warren Buffett is entering 2025 with the largest cash reserve at $Berkshire Hathaway-A (BRK.A.US)$ $Berkshire Hathaway-B (BRK.B.US)$ in over three decades.
What Happened: The conglomerate's cash holdings have reached a staggering $325 billion, marking the highest percentage of total assets since 1990, CNBC reported on Tuesday.
This cash accumulation comes as Buffett, 94, finds few attractive investment opportunities amid a highly valued market. The "Buffett indicator," which compares the total market value of U.S. stocks to GDP, has soared to 209%, a level not seen since the 1929 market peak, according to Oppenheimer data.
Throughout 2024, Buffett sold significant portions of his largest holdings, including $Apple (AAPL.US)$ and $Bank of America (BAC.US)$, offloading $133 billion in stocks during the year's first three quarters. Despite this, Berkshire's shares rose 27% in 2024, its best performance since 2021.
Buffett's strategy may involve waiting for a major acquisition opportunity, potentially benefiting his successor, Greg Abel. Analyst Kevin Heal from Argus Research suggests that some of the cash could be used for investments in distressed situations, allowing successors to leave their mark.
"This will also provide an opportunity for the successors to make their own mark when Mr. Buffett ocially hands over the reins."
Why It Matters: This substantial cash reserve positions Berkshire Hathaway for strategic maneuvers in the coming years. Recently, Buffett's investment activities have shown a shift. In December, Berkshire significantly increased its stake in Occidental Petroleum Corp. (NYSE:OXY), acquiring approximately 8.9 million shares over a few days. This move, totaling around $405 million, raised Berkshire's ownership to 28% of Occidental, valued at approximately $12 billion.
Price Action: As per Benzinga Pro, BRK.A's YTD returns rose by 25.69% while that of BRK.B increased by 25.35%
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
