Cash assets at Warren Buffet’s Berkshire firm hit record

Cash assets in the vault of Berkshire, the company of Warren Buffet, one of the richest people in the world, have reached a record level.

Berkshire Hathaway’s cash assets hit a new record, rising to $157.2 billion, boosted by both a lack of significant deals for billionaire investor Warren Buffett to invest his money and high interest rates.

Berkshire’s holdings, largely in short-term Treasuries, have surpassed the previous high from two years ago, the U.S.-based firm said on Saturday.

The conglomerate also reported an operating profit of $10.76 billion, up nearly 40 percent from a year earlier, as it benefited from the impact of rising interest rates.

MONEY LEFT IN THE SAFE

Although Berkshire’s acquisitions have accelerated in recent years, the company has struggled to find high-value deals this year. This left the company with more cash. Buffett has also focused on share buybacks due to a lack of attractive alternatives, saying these measures benefit shareholders.

Despite this, the lack of agreements did not reduce investor interest in the company. The class B shares of the holding companies reached a record level in September. Although shares have given back some of those gains, they are up nearly 14 percent since the beginning of the year.

INFLATION HAS NEGATIVELY AFFECTED

On the other hand, inflation negatively affected other parts of the holding company. Profits at BNSF, its railroad operations, fell 15 percent due to lower freight volumes and higher operating costs.

“The effects of significant increases in mortgage interest rates in the United States last year slowed demand for our residential construction and other construction products businesses,” Berkshire said in the report. “We continue to anticipate some of our businesses will experience declines through 2024 due to weakening demand, revenue and profits,” he said.

“Cash burn is definitely slowing,” said Edward Jones analyst Jim Shanahan. “Over time, Berkshire will start to feel some pressure to invest its cash,” he said.