With a large amount of cash on hand, what will Buffett do next?
Analysis suggests that although Buffett may have grand plans to make significant purchases when a bear market arrives or to seek opportunities to rescue blue-chip companies amid economic turmoil caused by tariffs, the real answer may be simpler: he is just patiently waiting for reasonably valued opportunities
After Buffett's perfect sale of Apple, how will the over $300 billion in cash be deployed? Against the backdrop of increasing volatility in global markets, Wall Street speculates on the following possibilities:
1. Large Acquisitions: Seeking Influential Targets
Investment writer and author of "Buffett and Munger: The Complete Investor" Alex Morris suggests two possibilities: acquiring the remaining shares of Coca-Cola or American Express that Buffett has long held and privatizing them, which would require approximately $280 billion or $130 billion, respectively.
In 2009, Berkshire made its largest acquisition ever, agreeing to buy Burlington Northern Santa Fe, the largest railroad company in the U.S. at the time, for $26 billion. But today, such an acquisition would only be one-tenth of its cash reserves, accounting for just 2.5% of Berkshire's value.
2. Strategic Bailouts: Seeking Larger Opportunities
During the 2008 financial crisis, Berkshire provided lucrative funding support to blue-chip companies like Goldman Sachs, Bank of America, and Dow Chemical. If similar opportunities arise again, especially amid market turmoil triggered by tariff shocks, Buffett may step in once more.
However, Morris states, "These deals need to be significantly larger to make an impact."
3. Patient Waiting: Seeking the Right Price Timing
Buffett's cash accumulation does not necessarily mean he foresees disaster. Fund manager, Buffett expert, and author of "The Complete Financial History of Berkshire Hathaway" Adam J. Mead points out, "He receives real-time information through his diversified conglomerate," but this only tells us that the few securities worth his investment—including Berkshire Hathaway stock—are currently not priced reasonably.
Moreover, considering that U.S. Treasuries now offer at least some yield, he is earning returns by waiting.
Berkshire currently holds about $318 billion in cash, setting a record for the highest amount ever held by any company. Buffett's precise timing in selling Apple stock allowed him to avoid the $1 trillion (approximately 25%) market value evaporation since Apple's peak in December. At the upcoming Berkshire Hathaway annual shareholder meeting, investors will focus on how Buffett deploys this historic cash reserve.
