REUTERS/Rebecca Cook
One of the biggest questions hanging over Berkshire Hathaway is why Warren Buffett has built such a large cash reserve.
The famed investor and Berkshire CEO dismissed the idea that he was setting aside a huge amount of cash, Treasury bills, and other liquid assets for his planned successor, Greg Abel, to invest once he’s gone.
“I wouldn’t do anything nearly so noble as to withhold investing myself just so Greg could look good,” he said at Berkshire’s annual shareholder meeting on Saturday, causing a wave of laughter to roll through the crowd.
Berkshire roughly doubled its cash pile to north of $300 billion last year, and it rose to a fresh record of nearly $348 billion in the first quarter of this year, the company’s earnings revealed on Saturday.
A big factor in the surge was Berkshire’s sale of two-thirds of its Apple position last year, which had been its largest portfolio holding for years. Buffett still praised Apple CEO Tim Cook, who was sitting only a short distance away from him in the crowd watching at the CHI Health Center, where Business Insider was watching the proceedings live.
Buffett said he would happily spend $20 billion, even $100 billion, on the right opportunity if it were a business or other asset that offered good value and they felt comfortable owning for the long term.
Soaring valuations for public stocks, private businesses, and even Berkshire stock have thwarted the value investor in recent years.
The billionaire said that he’d prefer if there were enough bargains on offer that Berkshire would only have $50 billion in reserve. But he said it would be the “dumbest thing in the world” to consistently invest $50 billion a year just to shrink Berkshire’s cash pile, as quality buys only appear occasionally.
He also emphasized that he may have already been too active in the market over the years.
“Charlie always thought I did too many things,” Buffett said, referring to his late business partner, Charlie Munger.
The post Warren Buffett says he isn’t stockpiling billions for Greg Abel to spend: ‘I wouldn’t do anything nearly so noble’ appeared first on Business Insider.
