Warren Buffett Chooses 5% Treasury Bills Over Share Buybacks as Berkshire's Cash Reserves Soar

Berkshire Hathaway Inc. has significantly reduced its share repurchases, indicating that Warren Buffett may now favor investing in 5% Treasury bills rather than buying back the company’s stock. This shift has raised eyebrows in the investment community.

What Has Changed? In 2024, Berkshire’s buybacks dropped to $2.9 billion, a significant decrease from $9.2 billion in 2023 and $7.9 billion in 2022, as highlighted by Lawrence McDonald, founder of Bear Traps Report. Meanwhile, the company’s cash reserves have skyrocketed almost 300% since 2022, climbing to $334 billion by 2025.

“It’s NOT just the size of the cash hoard that is noteworthy, but rather the ‘rate of change’ in its growth,” McDonald wrote. He emphasized the rapid increase in Berkshire’s cash position, which jumped from $109 billion in 2022 to $277 billion in 2024.

Berkshire Hathaway's Share Buybacks Over the Years

Here’s how the buybacks have compared over the last few years:

• 2024: $2.9 billion
• 2023: $9.2 billion
• 2022: $7.9 billion

With this change in investment strategy, Buffett's actions raise questions among investors.

Buffett's Annual Shareholder Letter Insights

In his annual letter to shareholders, Buffett, now 94 years old, discussed these trends and reiterated his dedication to business ownership despite the large cash reserves. He assured shareholders that Berkshire would continue to invest a significant portion of its money into equities, primarily U.S. stocks.

The increase in cash reserves coincides with Berkshire's divestment from several companies, including Bank of America and Citigroup, with proceeds being reinvested into Treasury bills. Buffett has pointed to attractive Treasury yields as a factor influencing this shift, although he cautioned that fixed-coupon bonds offer no safeguard against currency devaluation.

Market Conditions Affecting Buffett's Strategy

This change in strategy reflects both the current market conditions and Buffett's cautious outlook on investing. With U.S. stocks reaching all-time highs, finding appealing acquisition targets has become more challenging for the legendary investor, leading to an unprecedented build-up of cash equivalents despite his historical preference for owning businesses directly.

As the investment landscape continues to evolve, Buffett's approach may signify a broader trend among investors reevaluating their strategies in response to changing market dynamics.

Berkshire, Buffett, Treasury