Buffett's Berkshire Hathaway holds more short-term US Treasury bonds than the Federal Reserve!
As of the end of the second quarter, Berkshire Hathaway held $234.6 billion in short-term US Treasury bonds, while also having over $42 billion in cash and cash equivalents, including US Treasury bonds with a maturity of three months or less. In comparison, as of July 31st, the Federal Reserve held $195.3 billion in US Treasury bonds with a maturity of less than one year. If invested in three-month US Treasury bonds at a rate of around 5%, $200 billion in cash would generate approximately $10 billion in annual income
According to the latest financial report of Berkshire Hathaway, as of the end of the second quarter, it held $234.6 billion in short-term US Treasury bonds, while also having over $42 billion in cash and cash equivalents, including US Treasury bonds with a maturity of three months or less.
Berkshire's cash holdings increased from $189 billion at the end of the first quarter to $276.9 billion at the end of the second quarter, reaching a new high again. This was mainly due to Berkshire net selling $75.5 billion worth of stocks. This marks the seventh consecutive quarter where Berkshire sold more stocks than it bought, and the pace of selling stocks is increasing.
In comparison, as of July 31, the Federal Reserve held $195.3 billion in US Treasury bonds with a maturity of less than one year. This means that Berkshire Hathaway's holdings of short-term US Treasury bonds have exceeded those of the Federal Reserve.
Of course, the Federal Reserve also holds an incredibly large amount of longer-term US Treasury bonds—holding $4.4 trillion in US Treasury bonds. During the COVID-19 pandemic, the Federal Reserve was a major buyer of US Treasury bonds and has always been one of the largest holders of US Treasury bonds, as part of its efforts to maintain market liquidity.
Buffett has previously stated that during times of crisis, he would directly purchase short-term US Treasury bonds at auctions.
Due to the surge in US Treasury bond yields over the past two years, Buffett's massive cash reserves have generated significant returns. If invested in three-month US Treasury bonds at around 5% interest, $200 billion in cash would generate approximately $10 billion in annual returns