Buffett is 94. Munger died last year at 99. My guess is he’s planning for a post-Warren world. Conglomerates went out of fashion decades ago. On his death, his shareholding will be dispersed to multiple charities and foundations. Trustees of big foundations will want a diversified portfolio of stocks, not a single holding in a conglomerate. Furthermore I can’t see Greg Abel holding out against the fashion for break-ups in the way Buffet and Munger did.
I always figured that whoever got his money after his death would probably sell Berkshire stock but never really thought that would impact how BRK would be run. Just checked and Warren owns ~37% of Class A shares, which represent ~38% of BRK - so ~14% of the company.
Not sure that's enough to really trigger a shake-up but definitively seeing whether Abel wants to continue the conglomerate game or just be a regular fund manager will be interesting.
Hmmm. Never thought of that haha. He'd been selling for a while tho so who knows. Probably wasn't betting to heavy on Biden when he started selling AAPL in Q2.
In your 10 year chart the angle of the recent climb is steep, so that makes me nervous. The 1 year chart doesn’t look so bad. A 5 year weekly chart shows us at nosebleed area above the 200, so tight stops and not quickly buying back seems to be warranted. Thanks for keeping us on our toes with this. PS: amateur chartist here.
Financial noob here, but question. When someone like Buffet has some 300 billion in cash holdings, where is that cash actually being held? How is that money stored so that it is usable in short order? Obviously not a high yield savings account. :)
Interesting cash chart. It’s definitely worth pointing out that BRK’s cash position has grown substantially but I think the analysis here leaves out some important context.
As you mention, the long term investments bucket doesn’t include companies owned outright like GEICO. But those privately held companies are a much more substantial part of BRK’s portfolio than its publicly traded stocks. Neither bucket exists in a vacuum. So comparing cash to the liquid stocks alone doesn’t say much.
100% acquisitions of companies is BRK’s bread and butter. Buffett has mentioned in his letters again and again that it’s become harder to acquire entire companies at attractive prices (for reasons that go beyond high valuations across the board). This is a key factor in the growth of BRK’s cash position, especially since as you note WB doesn’t seek to time the market based on the general level of valuations.
In the event of a market downturn there’s a good chance we see a large portion of that cash position go towards acquiring a single company.
Super insightful charts on Buffett’s allocation, thanks for sharing.
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Thanks so much! Was a fun one to write.
Buffett is 94. Munger died last year at 99. My guess is he’s planning for a post-Warren world. Conglomerates went out of fashion decades ago. On his death, his shareholding will be dispersed to multiple charities and foundations. Trustees of big foundations will want a diversified portfolio of stocks, not a single holding in a conglomerate. Furthermore I can’t see Greg Abel holding out against the fashion for break-ups in the way Buffet and Munger did.
Interesting take.
I always figured that whoever got his money after his death would probably sell Berkshire stock but never really thought that would impact how BRK would be run. Just checked and Warren owns ~37% of Class A shares, which represent ~38% of BRK - so ~14% of the company.
Not sure that's enough to really trigger a shake-up but definitively seeing whether Abel wants to continue the conglomerate game or just be a regular fund manager will be interesting.
What do you think about the idea that Buffet sold because he was anticipating Harris winning (or at least hedging against that possibility)?
Hmmm. Never thought of that haha. He'd been selling for a while tho so who knows. Probably wasn't betting to heavy on Biden when he started selling AAPL in Q2.
Very insightful about Buffet's cash position and why we need to pay attention as investors. Thanks!
In your 10 year chart the angle of the recent climb is steep, so that makes me nervous. The 1 year chart doesn’t look so bad. A 5 year weekly chart shows us at nosebleed area above the 200, so tight stops and not quickly buying back seems to be warranted. Thanks for keeping us on our toes with this. PS: amateur chartist here.
Excellent
Financial noob here, but question. When someone like Buffet has some 300 billion in cash holdings, where is that cash actually being held? How is that money stored so that it is usable in short order? Obviously not a high yield savings account. :)
Interesting cash chart. It’s definitely worth pointing out that BRK’s cash position has grown substantially but I think the analysis here leaves out some important context.
As you mention, the long term investments bucket doesn’t include companies owned outright like GEICO. But those privately held companies are a much more substantial part of BRK’s portfolio than its publicly traded stocks. Neither bucket exists in a vacuum. So comparing cash to the liquid stocks alone doesn’t say much.
100% acquisitions of companies is BRK’s bread and butter. Buffett has mentioned in his letters again and again that it’s become harder to acquire entire companies at attractive prices (for reasons that go beyond high valuations across the board). This is a key factor in the growth of BRK’s cash position, especially since as you note WB doesn’t seek to time the market based on the general level of valuations.
In the event of a market downturn there’s a good chance we see a large portion of that cash position go towards acquiring a single company.