REUTERS/Rebecca Cook
- Warren Buffett's Berkshire Hathaway has deployed nearly $90 billion in the past three years.
- Berkshire's gross spending on stocks hit $107 billion, but it purchased $18 billion on a net basis.
- Buffett's team also spent $60 billion on buybacks and acquired Alleghany for $12 billion.
Warren Buffett's Berkshire Hathaway has put almost $90 billion to work in the past three years — but still ended 2022 with a nearly $130 billion cash pile, its latest annual report shows.
The famed investor's company purchased close to $107 billion worth of stocks — roughly Intel's market value — over the course of 2020, 2021, and 2023. However, it also sold $88 billion worth of shares, meaning its net outlay was $18 billion.
Meanwhile, Buffett and his team spent a then-unprecedented $25 billion on stock buybacks in 2020, then set a new record of $27 billion the following year. They bought back another $8 billion of Berkshire stock in 2022, lifting their total repurchases over the three-year period to about $60 billion.
Berkshire also bought insurer Alleghany for roughly $12 billion last year. Tally up the net stock purchases, buybacks, and acquisition spend, and the conglomerate deployed $89.5 billion over the past three years.
Buffett's spending spree is notable not just for its massive scale, but also its context. Stocks soared during the pandemic, private equity firms and special-purpose acquisition companies (SPACs) bid up the price of acquisitions, and even Berkshire shares reached new highs.
That was a frustrating state of affairs for a bargain hunter like Buffett, who repeatedly bemoaned the lack of compelling purchases during the pandemic. Berkshire was holding well over $100 billion in cash and US Treasuries that, until last year, were paying almost nothing in interest. In short, Buffett had money to burn but little to buy.
The investor and his team responded by widening their net. For example, they built multibillion-dollar stakes in the five largest Japanese trading houses. They also bought a piece of Nubank, a Brazilian financial-technology company.
Moreover, they bit the bullet and ramped up repurchases despite Berkshire's elevated stock price. Buffett also leveraged his friendship with Alleghany CEO Joe Brandon to buy the executive's company.
Berkshire's defiant spending hasn't completely cured Buffett's headache, as his conglomerate still ended 2022 with $129 billion in cash and short-term investments. But the Federal Reserve has hiked interest rates from nearly zero to upwards of 4.5% over the past year, boosting the return from those assets.
Buffett has also pledged to maintain at least $30 billion in reserve, as he wants to ensure Berkshire is never caught short of cash. Berkshire is one of the world's largest insurance companies, and could unexpectedly face a tsunami of claims to pay out one day.
Moreover, Buffett always maintains a war chest for tough times. He struck some of his most lucrative deals during the financial crisis, when funding dried up and he was one of the few lenders left standing. He's also noted that periods of fear and panic are often opportunities to snap up cut-price stocks and businesses.