Warren Buffett: Berkshire Hathaway Prefers Business Investments Over Cash Reserves

Berkshire Hathaway CEO Warren Buffett reaffirmed that his company prioritizes owning businesses over hoarding cash and securities.

In his annual letter to shareholders released on Saturday (Feb 22, 2025), Buffett explained that while Berkshire’s stock holdings declined last year, the value of its operating businesses increased. The conglomerate currently owns a wide range of subsidiaries across industries, including railroads, utilities, and insurance.

Record-High Cash Reserves & Government Bonds Reach $321.4 Billion

Berkshire Hathaway’s large cash and government bond holdings have recently drawn investor attention. By the end of 2024, Berkshire held $321.4 billion in cash and U.S. Treasury securities, equivalent to Rp 5,239 trillion (assuming an exchange rate of Rp 16,300 per USD).

This marked a record high, reflecting a 3.6% increase from the previous quarter.

Addressing this issue, Buffett emphasized that despite Berkshire’s massive cash reserves, most of its funds remain invested in equities.

"While some commentators focus on Berkshire’s unusually large cash position, the majority of our money remains in equities. That preference will not change," Buffett wrote.

Berkshire Remains Committed to Equity Investments

Buffett acknowledged that Berkshire’s holdings in publicly traded equities declined last year. However, he reassured shareholders that the company’s investment strategy remains unchanged.

"Berkshire shareholders can rest assured that we will always deploy the majority of their money into equities—primarily American stocks, though many of them operate internationally," he stated.

He also stressed that Berkshire will never prioritize cash-equivalent assets over well-managed businesses, whether as a majority or minority stakeholder.

Buffett and his deputies are currently seeking investment opportunities as S&P 500 continues to trade near all-time highs.

Berkshire’s Expansion into Japan

While Berkshire remains U.S.-focused, Buffett highlighted the company’s growing investments in Japan.

In July 2019, Berkshire began acquiring stakes in five major Japanese trading companies:

• Itochu,
• Marubeni,
• Mitsubishi,
• Mitsui, and
• Sumitomo.

A year ago, Buffett disclosed that Berkshire had acquired approximately 9% of each company and assured them it would not exceed a 9.9% stake.

However, in his latest letter, Buffett revealed that these companies have now approved an increase in Berkshire’s holdings.

"As we approached this limit, all five companies agreed to relax the cap slightly," Buffett stated. "Over time, you may see Berkshire’s ownership in these firms increase."

As of late 2024, Berkshire’s Japanese stock investments had reached a market value of $23.5 billion.

Berkshire’s No-Dividend Policy Remains Intact

Buffett also reiterated Berkshire Hathaway’s long-standing policy of not paying dividends, with the only exception occurring in 1967.

He emphasized that reinvesting profits rather than distributing them has proven highly beneficial.

As evidence of this successful strategy, Berkshire’s market value surpassed $1 trillion last year.

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