For years, Warren Buffett’s money fortress earned “only a pittance,” but now because of rising rates, Berkshire Hathaway ‘s mountain of cash is contributing meaningful earnings to the conglomerate. As of the top of September, Berkshire said its insurance and other businesses held $77.9 billion in U.S. Treasury bills, that are yielding north of 4% across maturities. For instance, the 6-month Treasury bill is yielding 4.61% on Monday. “Rising rates are enabling Berkshire’s still considerable money balance (over $100 billion) to once more earn a competitive return,” James Shanahan, Berkshire analyst at Edward Jones, said in a note. The Omaha, Nebraska-based conglomerate saw interest and other investment income increase $256 million within the third quarter, marking a 181.6% jump from a 12 months ago. Berkshire’s income jumped $331 million, or 72.3%, in the primary nine months of 2022. “The increases were primarily attributable to increases in short-term rates of interest,” Berkshire said in a press release. “While exceptionally low rates of interest prevailed lately, rates of interest increased significantly over the primary nine months of 2022.” Berkshire’s massive money position reached nearly $109 billion as of the top of the third quarter, and it has exceeded $100 billion each quarter going back several years, reaching nearly $150 billion in late 2021. The contribution to earnings from money had been very poor attributable to near-zero rates of interest. Buffett previously expressed frustration over holding money which had made virtually nothing. “This extraordinary liquidity earns only a pittance and is way beyond the extent Charlie and I wish Berkshire to have,” Buffett said in a 2017 annual letter when it had $116.0 billion in money. “Our smiles will broaden when we now have redeployed Berkshire’s excess funds into more productive assets.” To make certain, Berkshire is finding ways to place money to work. Through the first nine months of 2022, the conglomerate paid $66.2 billion in money to purchase stocks and received proceeds of $17.3 billion from sales of equity securities. Berkshire acquired insurer Alleghany for $11.6 billion on Oct. 19, which was funded by existing money balances.
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