Berkshire Hathaway ‘s purchase of Treasury bills has been so aggressive that the Warren Buffett-controlled conglomerate now owns 3% of the entire bill market, according to JPMorgan. “Berkshire Hathaway has drastically grown its T-bill position over the years and now comprises a larger share of the market than international organizations, stablecoin issuers, offshore money market funds, or local government investment pools,” JPMorgan’s fixed income strategists said in a note last week. The Wall Street bank estimated that Berkshire’s $158 billion in T-bills at the end of March accounted for 3% of all outstanding short-term government bills. The “Oracle of Omaha” stood out as one of the most prominent investors able to take advantage of higher interest rates, thanks to Berkshire’s mountain of cash — a record $189 billion at the end of March. With short-term rates topping 5%, his massive cash pile, which had been an area of concern when rates were near zero, is now earning Berkshire a substantial return. Buffett has been buying 3- and 6-month Treasury bills every Monday at weekly Treasury auctions, sometimes in increments of $10 billion. The government sells T-bills for terms ranging from four to 52 weeks. Berkshire, with its gigantic footprint in insurance, has always maintained ample liquidity and prioritized safety over yield when it comes to deploying excess cash in short-term instruments. Cash is attractive Buffett believes that short-term Treasurys are the yardstick against which other values are measured — a sharp rise in rates effectively lowers the present value of any future earnings. The Berkshire CEO has said he just doesn’t see anything else appealing right now. “It isn’t like I’ve got a hunger strike or something like that going on. It’s just that they — things aren’t attractive,” Buffett said at Berkshire’s annual meeting in early May. After keeping rates near zero for most of the past 15 years, the Federal Reserve embarked in March 2022 on its most aggressive campaign to lift borrowing costs since the 1980s to fight high inflation. The federal funds rate has been between 5.25%-5.50% since July 2023 , when the Fed last hiked rates and took the overnight fed funds rate to its highest level in more than two decades. The investment legend recently said he finds cash attractive compared to other assets, especially stocks. Berkshire’s cash position may top $200 billion at the end of the second quarter, he added. “I don’t mind at all, under current conditions, building the cash position,” he said at Berkshire’s shareholder confab. “I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.”
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