Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / Why Berkshire Hathaway Is Quietly Building a Cash Fortress in 2026
Transcript
- Lucas: Berkshire Hathaway just reported a cash hoard of over $350 billion as of its latest filing. That's up from $325 billion at the end of last year and it's now the single biggest cash pile any corporation has ever held. Luna: Three hundred fifty billion? That's almost the entire market cap of companies like Coca-Cola or Bank of America. Why is Buffett sitting on that much dry powder? Lucas: That's the question everyone's asking. And given the market environment in June 2026, I think there's a clear message. The S&P 500 is trading around 7,430, down slightly from its highs, but still up significantly from three years ago. Meanwhile, the Russell 2000 — small caps — popped 3.1% in the past week alone. So there's rotation happening. Luna: Right, and the value ETFs like IWD and VTV are both up over 2% in the same period. So value is back in vogue. But doesn't Berkshire typically sit on cash when they can't find attractive deals? Is that what's happening? Lucas: Exactly. Buffett and his team, particularly Todd Combs and Ted Weschler, have always said they only write a check when the price is right. And right now, they're not seeing enough opportunities. Think about it — the IPO market is red hot with SpaceX raising $75 billion in what's being called a record-setting debut. But Berkshire isn't touching that. They prefer mature, predictable businesses with strong moats. Luna: But hasn't Berkshire been buying back its own stock aggressively? They've spent billions on buybacks in recent years. Why not just keep doing that if they think their own stock is cheap? Lucas: Great point. In fact, in the most recent quarter, Berkshire slowed its buyback pace significantly. They bought back less than $2 billion worth of shares, compared to over $5 billion in the prior quarter. That's a clear signal that even Buffett thinks Berkshire's stock — trading around $489 — isn't the screaming bargain it once was. Luna: So the cash pile is growing because they're not finding compelling buys in public markets, and they're not buying back shares aggressively. That sounds like a cautious view on where we are in the cycle. Lucas: It's a classic Buffett move. He's earned a reputation for being greedy when others are fearful and fearful when others are greedy. And right now, there's a lot of greed. The SpaceX IPO is generating massive retail demand, and tech stocks like Apple, Microsoft, and NVIDIA have seen double-digit declines over the past month — but they're still expensive on a price to earnings basis. Luna: Apple is down 3.5% in just the past week. Microsoft down over 5%. It's a tech selloff, but the narrative is still that AI will save everyone. Is Buffett saying that narrative is overblown? Lucas: I think he's saying that the prices don't reflect the risk. Berkshire's portfolio still has big stakes in Apple and Amazon, but they trimmed Apple last quarter. They're not abandoning tech, but they're not doubling down either. And with $350 billion in cash, they have the firepower to step in if a real crisis hits. Luna: So what could trigger them to deploy that cash? A recession? A market crash? Or just a few undervalued businesses? Lucas: Probably a combination. The last time Berkshire was sitting on a comparable cash pile relative to assets was in 2008, right before the financial crisis. Then they deployed billions into Goldman Sachs, General Electric, and other distressed names at very favorable terms. So the pattern is clear: build cash during euphoria, deploy during panic. Luna: But this time feels different. We have AI, we have a resilient economy — GDP is still growing, jobs are solid. Are we really in euphoria? Lucas: Some pockets are euphoric. The SpaceX IPO is a prime example. And the fact that small caps are rallying while mega-cap tech stumbles suggests rotation, not a broad-based selloff. But Berkshire's cash hoard is a contrarian indicator worth watching. If Buffett starts buying, that could be a signal that the coast is clear for value investors. Luna: So for someone building a concentrated portfolio, what's the takeaway? Should they mirror Berkshire's caution or start nibbling at beaten-down names? Lucas: I'd say take a page from Berkshire's playbook: don't force it. If you can't find stocks trading below your estimate of intrinsic value, it's okay to hold cash. But if you see a high-quality business like Bank of America or JPMorgan — both up over 3% and 4% respectively this week — that still has a durable competitive advantage, you don't need to wait for a crisis. Luna: Yeah, and dividend growth stocks have been quietly compounding. We did an episode on that recently. But Berkshire doesn't pay a dividend, so that's a different strategy. Lucas: Right. Berkshire reinvests all its earnings, and they believe they can generate better returns than shareholders would get from dividends. So far, they've been right. But the cash pile raises the question: are they becoming too conservative? Luna: It's a good problem to have, I suppose. If our money conversations have helped you think about a decision differently, a couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: Yeah, it really does make a difference. We keep the show ad-free and independent, and listener support is the reason. So thank you to everyone who already contributes. Luna: Alright, back to Berkshire. So do you think they'll ever deploy that cash in this cycle, or will they just let it sit? Lucas: I think they'll wait for a bigger dislocation. But if you look at their recent moves — they've been buying more shares of a few Japanese trading companies like Mitsubishi and Mitsui — they're willing to act when they see value. It's just that the U.S. market broadly doesn't offer it right now. Luna: That's a good reminder that value is global. Buffett has been increasing his exposure to Japan, and those stocks have performed well. Lucas: Exactly. And that's the mindset of a concentrated portfolio manager — patient, disciplined, and willing to look where others aren't. For now, the biggest signal from Omaha is caution. Investors would be wise to at least consider what that implies for their own portfolios. Luna: Well said. Thanks, Lucas. Lucas: Thanks, Luna. That's all for this episode of Stock Picking with Fexingo.