> Warren Buffett Blog: Berkshire holding high cash levels

Wednesday, October 19, 2016

Berkshire holding high cash levels

Warren Buffett has the kind of money problem most people would envy: a growing mountain of cash. Buffett compares investing to baseball, except that investing is a game where the hitter can stand at the plate indefinitely waiting for the right pitch.

“The stock market is a no-called-strike game. You don’t have to swing at everything. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’ ”

Nearly $73 billion piled up at Berkshire Hathaway by mid-summer, more than CEO Buffett’s conglomerate has ever held before. And the total continues growing every day Buffett doesn’t make a major investment because Berkshire’s 90-odd businesses generate roughly $1.5 billion in cash every month.

Buffett’s options include buying entire businesses, picking up a few million shares of stock or investing more in companies Berkshire already owns, such as BNSF railroad and the utilities of Berkshire Hathaway energy.

So far, Buffett appears to be mostly sitting on the cash since January, when Berkshire completed its biggest acquisition in its history, a $32.36 billion deal for aviation parts maker Precision Castparts.

Of course, not all of Berkshire’s cash is available because Buffett wants to keep at least $20 billion on hand at all times just in case Berkshire’s insurance companies have to pay a big claim or some other need arises.