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Berkshire Hathaway now owns more short-term government bonds than the Federal Reserve.
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The company has increased its investments by 81% year-to-date from June to the year-ago period, and now holds $234.6 billion.
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It is on track to generate an annual risk-free rate of about $12 billion.
Warren Buffett’s Berkshire Hathaway now owns more short-term government bonds than the Federal Reserve.
The company held $234.6 billion in short-term U.S. Treasuries at the end of the second quarter, according to its latest earnings report, up 81% from the roughly $130 billion it held at the end of 2023.
It also surpasses the Federal Reserve’s T-bill holdings, which were $195.3 billion last week.
Buffett’s preference for Treasurys reflects the fact that he can’t find worthy investments that outperform the more than 5% annualized risk-free government debt. Some worry that the billionaire investor has turned the U.S. stock market sour. He has raised money in the past when he saw few attractive investment opportunities because of high valuations.
For comparison, the 1-month T-Bill has a yield of 5.33%, the 3-month T-Bill 5.22% and the 6-month T-Bill 4.95%.
These interest rates should generate risk-free profits of about $12 billion annually for Berkshire Hathaway’s massive T-Bill holdings, or quarterly profits of about $3 billion.
At Berkshire Hathaway’s annual shareholder meeting in May, Buffett called T-Bills “the safest investment there is.”
Treasury bills also offer investors tax advantages because the interest paid is exempt from state and local taxes.
The Treasury additions weren’t Berkshire’s only bold move in the second quarter. The company also halved its stake in Apple stock during the period, selling about 390 million shares.
Read the original article on Business Insider
