Buffett cash cache: $122B

Warren Buffett's distaste for overpaying is winning out over his frustration with sitting on a lot of cash.

With stocks at record highs, Berkshire Hathaway sold $1 billion more worth of stocks than it bought last quarter, its biggest net selling since the end of 2017. Buffett spent last year building a massive stake in Apple and pouring billions into investments in the biggest US banks. This year’s rally hasn’t drawn him in.

Buffett has dealt with the issue of cash piling up as he waits to strike, but never at this size. He hasn’t had a major acquisition in several years and has even pulled back on one of his newer ways to deploy cash, slowing down repurchases of Berkshire's own stock in the second quarter. The result was that the company’s cash hoard — a major focus for investors in recent years — surged to a record $122 billion.

“It would be hard to look at the cash balance and their uses of cash in recent quarters and not be disappointed that they haven’t bought any companies, they haven’t bought much stock, and they haven’t bought back a lot of their own stock,” Jim Shanahan, an analyst at Edward Jones, said in a phone interview.

The growing cash pile is a reflection of the strength of the operating businesses that Buffett has assembled under one roof, and allows the billionaire investor flexibility to move quickly when big deals emerge. But he has acknowledged that having more than $100 billion earn little return for several years weighs on the company’s growth.

Buffett, 88, earned his legendary status by consistently outperforming the broader market, but Berkshire’s total return has trailed the S&P 500’s over the last five, 10 and 15 years. That’s raised questions of whether Berkshire has grown too large to generate excess returns, and whether the cash would be better off returned to shareholders.