Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How Berkshire Built a Record Cash Pile in 2026
Transcript
- Lucas: So the S&P 500 is at 7,521 as of today, up another 1.2 percent for the week. Small caps are ripping — the Russell 2000 is up nearly 4 percent in five days. And Berkshire Hathaway is sitting on more cash than ever. Luna: I saw that number — it crossed four hundred billion dollars, right? Lucas: Yeah, it's $406 billion as of the most recent filing. That's up from $325 billion at the end of last year. And the stock is basically flat — down 0.1 percent this week. Meanwhile, the market is hitting new highs. Luna: So Buffett is doing nothing while everyone else is piling in. That feels like a signal. Lucas: That's the question. Is it a signal about the market — or just the reality that he can't find anything big enough to buy? I mean, Berkshire generated something like $40 billion in operating earnings last year. Cash is piling up faster than they can deploy it. Luna: But Jamie Dimon just said JPMorgan could spend $20 billion on an acquisition. That's a different kind of patience. Lucas: Right — Dimon is explicitly saying we're on the lookout. He wants to deploy. Buffett is saying, effectively, nothing looks attractive. And that difference is worth unpacking, because both see the same economy. Luna: So what does Berkshire's cash yield right now? They're not just letting it sit in a checking account. Lucas: They're mostly in Treasury bills — short-term. So that cash is earning roughly four and a half percent, which is not nothing. On $400 billion, that's about $18 billion a year in interest income. That's more than most Fortune 500 companies earn from their actual businesses. Luna: So the cash is working. It's not just dead weight. Lucas: Exactly. And that's the Buffett logic: if you can't find a business to buy at a price that gives you a better return than T-bills, you hold T-bills. It sounds simple, but most CEOs don't have the discipline to do it. They feel pressure to do deals. Luna: But the market is at records. Small caps are up almost 4 percent this week. You'd think there would be value somewhere. Lucas: There might be — but not at the scale Berkshire needs. To move the needle for Berkshire, you need a $50 billion plus acquisition. There aren't many companies that size that are cheap. And the ones that are cheap — like energy, maybe — have their own problems. Luna: Energy has been getting crushed. Exxon is down almost 6 percent this week. Lucas: Chevron too — down 4.4 percent. So you might think Buffett would be buying. But he sold some Exxon last quarter. He's clearly not bullish on oil at these levels. So the cash pile grows. Luna: Historically, when Berkshire's cash pile peaks, does it coincide with market tops? Lucas: There's some correlation. In 2021, cash was around $150 billion — then the market corrected in 2022. In 2007, cash was high before the financial crisis. But it's not a perfect timing signal. Sometimes the cash just stays high for years, like after the dot-com bust. Luna: So maybe this time is different — maybe it's structural, not cyclical. Lucas: I think that's the better read. Berkshire is now so large — market cap over a trillion — that the universe of acquirable companies is shrinking. And when you add in competition from private equity, which can use leverage and pay higher multiples, it's just harder for Berkshire to compete. Luna: Unless they buy a really big company. Apple? They already own a ton. Lucas: They could buy more Apple — they already have authorization. But Apple is trading at $310, up 2.8 percent this week. It's not cheap. And buying more of a stock you already own doesn't change the business model. The magic of Berkshire has always been buying whole businesses. Luna: So what would they buy? A railroad? An insurance company? Another utility? Lucas: The speculation is always about a big utility or a railroad. But the antitrust environment is tougher now. And the big railroads — Union Pacific, CSX — they're not necessarily for sale at a price Buffett would like. So the cash sits. Luna: Meanwhile, the broader market is pricing in a soft landing. The S&P is up, small caps are roaring. If Buffett is wrong, he's leaving returns on the table. Lucas: He's okay with that. He's said many times: the most important thing is not losing money. And if holding cash means missing a rally, he'll take that trade. The question for us as investors is whether we should do the same. Luna: I think most of us don't have $400 billion. So the answer might be different. Lucas: Right. For an individual investor, holding a lot of cash in a rising market is painful. But the principle still applies: if you can't find opportunities, it's okay to wait. The FOMO is the enemy. Luna: And that actually connects to something I've been thinking about with this show. We spend a lot of time talking about specific stocks, valuations, strategies — and we try to keep it ad-free because we think that's the right way to have this conversation. Lucas: Yeah, we've always felt that if the content is valuable, it should stand on its own. No sponsors pushing a narrative. If you find value in these conversations and want to support that independence, there's a simple way — buy me a coffee dot com slash fexingo. No pressure, just an option. Luna: Exactly. Keeps us honest. And it lets us keep doing episodes like this one. Lucas: Back to Berkshire — so the real takeaway for me is that the cash pile is less a market call and more a statement about the opportunity set. And that's useful for all of us to think about: are we acting because we see value, or because we feel pressure to do something? Luna: That's the Buffett lesson that doesn't require billions. Just patience. Lucas: Exactly. So next time you feel like you have to buy something because the market is going up, ask yourself: would you rather own this stock or a four and a half percent Treasury? If the answer isn't clear, maybe the cash pile is the right move.