A market collapse and worries about a global recession have driven people out of stocks. Some investors have even sold U.S. Treasury bonds, which are supposed to be among the safest investments in the world. The money from these sales has begun to move into cash.
The world’s most famous investor has kept an enormous sum of money in case for months. Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-B) has $345 billion in cash as of its last report to the government. Investors have wondered why he has not used the money to invest in public companies.
Buffett’s decision is probably one reason his net worth has risen by $12 billion since the start of the year. According to the Bloomberg Billionaires Index, his current net worth is $154 billion, which places him in fourth place on the list.
Buffett owns 15% of Berkshire Hathaway and has additional shares, giving him 38% of the voting stock.
Buffett’s flagship Berkshire Hathaway shares are up 9% this year, while the S&P 500 is down 13%. One reason is its cash holding. Another is the diversification of its equity holdings. This includes stakes in Coca-Cola, American Express, Occidental Petroleum, Visa, Chubb, Chevron, and other public companies.
Berkshire also has substantial investments in private companies, including insurance company giant GEICO and BNSF Railway, the largest freight railroad in the United States.
Investors can also examine Buffett’s long-term track record. A $10,000 investment in Berkshire 30 years ago would be worth $682,000 today.
Additionally, Buffett favors insurance companies. He owns Berkshire Hathaway Reinsurance Group, National Indemnity Company, and Berkshire Hathaway Specialty Insurance, which focuses on business and commercial insurance. Describing these investments, he said, “It’s so much fun because you get the money at the start, you know, and then find out whether you’ve done something stupid later on.”
Finally, Buffett bought companies that did not fit his usual pattern. In 1983, he purchased Nebraska Furniture Mart for $60 million, and in 2014, he bought the Miami-based TV station WPLG.
If the market keeps falling and investors continue to move out of mega-cap techs, Buffett may be one of the few richest people in the world who continues to get richer.
Top Gaining Stocks
Top Losing Stocks