Berkshire Hathaway's cash reserves have swelled to a staggering $134 billion — yes, that's billion with a B — and investors are scrambling to decode what the Oracle of Omaha might be signaling about the market's future.
I've been watching Berkshire (BRK.A, BRK.B) for nearly a decade, and this kind of cash hoarding typically means one of two things: Buffett either sees trouble on the horizon or he's preparing for a major acquisition. Given his track record, neither possibility should be dismissed lightly.
Berkshire's Class A shares closed yesterday at $648,240 (down 0.3%), while the more accessible Class B shares ended at $428.12 (down 0.4%). Not exactly a panic sell-off, but there's definitely some uneasiness in the air.
"Buffett's cash position has been a reliable indicator in the past," says Marcus Thompson, chief investment strategist at (Undisclosed) investment firm. "Before the 2008 financial crisis, before the 2020 pandemic crash — both times, Berkshire was holding unusually large cash reserves."
What's particularly interesting is the timing. With the major indices hitting all-time highs just last month (S&P 500 topped 5,700 before pulling back), Buffett's defensive posture seems almost contrarian. But then again, that's kind of his whole thing, isn't it? Be fearful when others are greedy, and all that.
The big question now is: what's he waiting for? At 94, Buffett isn't getting any younger, and his legendary patience might be tested if a market correction doesn't materialize soon. There's also the possibility that Berkshire's sheer size makes it increasingly difficult to find acquisition targets large enough to move the needle.
For what it's worth, I added to my own BRK.B position last month. If there's one thing I've learned over the years, it's that betting against Warren Buffett rarely ends well.
