It’s a Berkshire weekend. They always sneak up on me.
Ol’ Warren (and “ol'” isn’t just a folksy colloquialism in this context, he really is old) was sitting on more cash than ever at the end of Q3, Saturday’s quarterly filing showed.
At $381.673 billion, Buffett’s cash pile swelled by almost $36 billion from the prior quarter, the largest QoQ increase in a year.
You might recall that Berkshire’s cash and equivalents fell in Q2 for the first time in three years. Buffett’s back on track now, where that means back to hoarding.
The figure also shows the net buying/selling calculation for Berkshire’s equity holdings (i.e., net buy/selling of stocks other than Berkshire’s). Buffett was a net seller in Q3 for the 12th consecutive quarter.
I’ve heard a lot of excuses for that, but it’s difficult to escape the notion that Warren simply became more cautious the older he got. Ironically, it was Buffett himself who offered the most plausible alternative explanation. In early 2024, he said this:
There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we can’t. And, if we can, they have to be attractively priced. Outside the US, there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance.
There you go. By the time Charlie Munger died, he and Warren had built a beast so large as to make cash deployment not worth the risk. If your needle is so big that nothing can move it, why bother? Hence an ever rising cash pile.
Technically, Buffett’s stepping away from his duties as CEO, but as I put it in August, there’s an (almost) real sense in which he’ll run Berkshire even after he dies. (It’s impossible to conceive of managing Berkshire and making investment decisions without asking yourself what Warren would do. You could picture yourself looking in the mirror and arguing your case, alternating between your own voice and your best impression of Buffett’s.)
The stock’s down more than 10% since Buffett first announced he’s stepping down as CEO. And yet, he declined to buy back any of his own stock again in Q3, Saturday’s filing indicated. Until year-end anyway, repurchases are at his sole discretion. Berkshire hasn’t bought back any of its own shares in 2025.
Wondering if there’s already an AI version of Uncle Warren in the works…that really will run BRK after the real one is gone…?
Given the per-token cost of AI inference, it’s probably more cost-effective to rely on his highly paid carbon-based protégés whose sophisticated neural networks have already been fine tuned to emulate Uncle Warren.
No reason to buy something, just because he has waited so long. Make a mistake now, and you are remembered as “got too old and really screwed up”. Might not be time to redeem yourself. Let younger minds take over, give them their turn. He is probably leaving it in good hands.
Seems like he has missed a massive run up in the stock market. Is that good investing?
25 years ago he mostly stood on the sidelines and missed that massive runup too. Then I sold my BRK to go all-in chasing the internet – telecom tech bubble…which cratered my fantasy of early retirement! But – maybe this time is different?
I’ll be happy to keep a healthy position in the care of Uncle Warren’s ghost, even while enjoying steadily harvesting the fruits of substantial positioning in the current market mania!
I remember last year when Buffett was going to 30% cash, the official reasoning was that the ‘Buffett Indicator’ of S&P500 market cap over GDP was too high at over 100%. It’s now over 200% and still climbing. Some of the golden rules for those who would follow Buffett are to buy good companies at good prices, but not to try to time the market. If Buffett is waiting for a 60+% pullback in the market to buy, he may be waiting a long time. It may happen and he would look like a genius if it does, but it certainly looks like trying to time the market.
Mr. Buffett has accurately diagnosed his company’s situation. He has driven the value of his company as high as it’s going to go. Even the seven market giants won’t help BRK materially. Their market gains have nothing to do with real life so he hasn’t and go there. The only way buying NVDA, for example, can boost Berkshire’s performance is in market cap. He is leaving that prospect to individuals to risk their capital in. He tried Apple and discovered nothing good would come of that investment. Berkshire is a conglomerate that already owns everything that will make it better. This situation was inevitable and he has known it for at least a decade. Now he’s just going to let it pile up slowly because there really is no other choice.
The other choice is to return atleast some of that excess capital to shareholders. Isn’t that what corporations are supposed to do in a situation like this?
I’d love to see them start paying a dividend, but I don’t think it will happen while Buffett is still around
I think that when Warren Buffett passes, the company will do a massive buyback. The company needs to shrink, in order to continue to effectively manage the 39% of BRK that is/will continue to be owned by Buffett/his controlled entities.
It would be in keeping with Warren Buffett’s character to provide an exit ramp for long term stockholders who don’t want to be stockholders after he dies.