Warren Buffett, who has long favored holding massive amounts of cash, is headed into 2025 with a particularly gigantic war chest at Berkshire Hathaway — in fact the largest cash hoard in 34 years. The Omaha-based conglomerate’s cash level stands at $325 billion — a record high in absolute terms — and now accounts for about 30% of Berkshire’s total assets, the highest percentage since 1990, according to data from Oppenheimer. Buffett first took control of Berkshire, originally a clothing manufacturer, in 1965 and went on to transform it into a one-of-a-kind conglomerate. Why is the 94-year-old legendary investor holding on to so much cash? The most obvious explanation could be that he simply isn’t finding appealing areas that would enable him to deploy large portions of cash in an expensive market. The market’s valuation has reached historic proportions using Buffett’s own favorite gauge for overall valuation: the ratio of the total market value of U.S. stocks as a proportion of gross domestic product, The “Buffett indicator” has soared to an all-time high of 209%, a level last seen at the 1929 market peak. To put that into context, the gauge peaked at 140% before the dotcom bubble burst in the early 2000s, according to data from Oppenheimer. “I think it is valuation and lack of finding attractive buys,” Bill Stone, chief investment officer at Glenview Trust Company and a longtime Berkshire shareholder, said of Berkshire’s cash pile. “It is tough to find his kind of quality companies on the cheap.” Berkshire’s cash has only grown after Buffett this year aggressively dumped enormous pieces of his two largest holdings, Apple and Bank of America . He was in a selling mood for most of 2024, offloading $133 billion worth of stock in the first three quarters of the year. BRK.A YTD mountain Berkshire Hathaway The owner of Geico insurance and BNSF Railway is wrapping up a stellar year that saw its shares rise about 27%, its biggest yearly gain since 2021. Berkshire achieved the lofty returns even as stopped buying back its own stock this year. Buffett watchers believe that the investor is patiently waiting for the right time to pull off an “elephant-sized” deal, despite his advanced age. Building the war chest could also benefit his chosen successor, Greg Abel. “Some of the $325 billion in cash will eventually be used to invest in a ‘distress’ situation, either an industry or individual company similar to what BRK did during the last economic crisis,” Kevin Heal, an analyst at Argus Research who covers Berkshire, said in a recent note. “This will also provide an opportunity for the successors to make their own mark when Mr. Buffett officially hands over the reins.”
