Buffett’s $300B Cash Pile, Fed by Apple, Spurs Investment Guessing Game

With the stock market in chaos, US economic growth at stake, and confidence on the wane, it’s prime time for Warren Buffett, the granddaddy of stock influencers, to reveal another killer investment idea.

The setup couldn’t be better for Berkshire Hathaway shareholders. They’ll be making their annual pilgrimage to Omaha this week to celebrate Buffett’s 60th year at the helm. What would make for a better anniversary gift than a diamond-in-the-rough stock pick?

Au Contraire

Buffett acolytes are primed to be receptive to new ideas after Berkshire’s more contrarian bets over the last decade have proven prescient. For example:

• Not buying American is paying off. In 2020, the company announced it had built up a stake of just over 5% in five leading trading companies in Japan that import goods from metals to textiles. The country’s stock market bounce in the years following justified Berkshire’s venture outside the US, but was also supported by clever financing. The company has issued yen-denominated debt, allowing it to borrow at lower interest rates and strip out the currency risk underlying its investment.
• Better still, Berkshire sold a large chunk of its Apple holdings in several tranches last year after a solid run-up since its initial purchase — and before tariffs hit. While the company raised eyebrows when it added the iPhone maker to its portfolio in 2016, because tech wasn’t its usual fare, picking up the brand name amid a sales slump was the right call. Berkshire’s paper gains are estimated at $110 billion per the Wall Street Journal’s calculations.

When the company disclosed earlier this year that it sold out of the SPDR S&P 500 and the Vanguard S&P 500, broad-market tracking ETFs, folks wondered if it was a signal to get out of Dodge. By the looks of the benchmark index’s performance so far this year … it was.  

Some of those wins have added to Berkshire’s growing cash pile of over $300 billion, heightening anticipation for what’s coming next. 

Goodie Bag: Buffett promised all sorts of goodies that will “lighten” wallets at this year’s shareholder meeting, including Squishmallows, Fruit of the Loom underwear, Brooks running shoes, and 5,000 copies of a special Berkshire history book, but folks are probably far more interested in what would prompt the company to dig into its coffers. If anyone can find a shred of upside in the current state of affairs, the Oracle of Omaha might be the one.