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Alright, let's talk about the money. One of the biggest headlines out of Omaha wasn't just Buffett's retirement, but the sheer size of Berkshire's cash hoard. It hit a new record: a staggering $347 billion sitting in cash, cash equivalents, and Treasury Bills at the end of the first quarter.
A good problem to have?
For most companies, that much cash would be cause for celebration. For Berkshire, it's become a bit of a puzzle. Buffett himself admitted, "I don't think anybody sitting at this table has any idea of how to use it effectively, and therefore we don't use it". Berkshire has actually been selling more stocks than it's been buying for ten straight quarters.
What does this mean for you, the investor? On one hand, it's a sign of discipline. Buffett refuses to chase overpriced deals or buy things just for the sake of spending money. That cash pile also acts as a massive safety net in uncertain times, allowing Berkshire to weather storms and potentially pounce on bargains if markets get rocky. On the other hand, cash-earning T-bill rates aren't likely to generate the kind of returns Berkshire shareholders have historically enjoyed. Finding smart ways to deploy that capital will be one of Greg Abel's biggest challenges.
Trimming the Apple, betting on Japan
Speaking of deploying capital (or not), Berkshire did make headlines by trimming its massive stake in Apple by about 13 per cent in the first quarter. Before you panic, Buffett clarified this wasn't a negative call on Apple's future. He praised CEO Tim Cook effusively (joking that Cook had made Berkshire more money than he had!) and said the sale was largely for tax reasons, possibly anticipating higher rates down the line. Apple, he assured, will likely remain Berkshire's biggest stock holding.
In contrast, Buffett doubled down on his enthusiasm for Berkshire's big bet on five Japanese trading houses (Mitsubishi, Mitsui, Itochu, Sumitomo, and Marubeni). Having invested over $23 billion, he declared Berkshire wouldn't sell these stakes "in decades, if then". It's a classic Buffett long-term play, built on relationships and trust in management.
Under the hood: Trains, energy, and insurance tech
The Q1 earnings, released alongside the meeting, showed the underlying businesses chugging along, though operating earnings dipped 14 per cent year-over-year, mainly due to weaker insurance underwriting results and currency effects. (Remember, ignore the headline net earnings, they swing wildly due to unrealised investment gains/losses.)
- BNSF Railway: Held steady.
- Berkshire Hathaway Energy (BHE): Showed strong growth, a good sign given Abel's background leading this unit.
- Insurance: Investment income rose thanks to higher rates, but underwriting profit fell. Ajit Jain, the insurance guru, reported "rapid strides" at Geico in using telematics (tracking driving behaviour) to price policies better, admitting they had been playing catch-up but are now "as good as anyone". Still, he cautioned it wasn't "mission accomplished" yet.
Overall, the Berkshire engine is still running, generating enormous cash. The challenge remains finding enough high-quality, reasonably priced opportunities to reinvest that cash effectively.
Coming up in Part 3: Buffett's take on trade wars, AI scams, and the unique vibe of the Omaha pilgrimage
This article was originally published on May 04, 2025.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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