The Strategist

Buffett's holding increases its cash reserves to near-record amount

05/03/2021 - 02:29

Buffett's holding company's cash stocks have exceeded $145bn, approaching a record. The investor billionaire has become more cautious about spending: Berkshire Hathaway's spending on buying back its own shares has fallen by more than a quarter.

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Berkshire Hathaway holding company, led by billionaire Warren Buffett, increased its cash reserves by more than 5 percent to $145.4 billion at the end of the first quarter, Bloomberg reported. This is close to the record set in the third quarter of last year, when Berkshire Hathaway's cash stocks were estimated at $145.7 billion. It fell to $138.3 billion at the end of the fourth quarter.

In recent years, Buffett has tried to find a use for Berkshire Hathaway's huge and ever-growing cash cushion, Bloomberg writes. However, at last year's shareholder meeting, the investor admitted that he did not see any interesting takeover targets. Because of this, the holding company began buying back its own shares for large sums of money. It spent a record $24.7 billion for the entire last year, including $9 billion each during the third and fourth quarters. However, early this year, Buffett has become more cautious, writes Bloomberg: in the first quarter of 2021 the pace of redemption of securities slowed to $ 6.6 billion - a 27% decrease.

According to the results of the first quarter Berkshire showed good results, says Bloomberg. Quarterly earnings of the company were the second largest for the period since 2010. Net income reflecting the dynamics of Berkshire's $282 billion share portfolio amounted to $11.7 billion, while for the same period in 2020 the holding company reported a $49.7 billion loss. Berkshire Hathaway's operating profit for the first quarter was $7 billion, up nearly 20% from $5.9 billion in the same period a year earlier.