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"Berkshire held $112B at year end in U.S. Treasury bills and other cash equivalents, and another $20B in miscellaneous fixed-income instruments. We … always hold at least $20B in cash equivalents to guard against external calamities." Warren Buffett today berkshirehathaway.com/letters/2018lt…
Berkshire reported a 71% gain in fourth-quarter operating profits (operating profits rose to $5.7B). Why not invest more of the cash in existing business in the BRK portfolio like Precision Castparts? Because incremental investments to not exceeed the opportunity cost of capital.
"The bulk of Berkshire’s stock buybacks in the fourth quarter occurred between Dec. 13 and Dec. 24." Do you recall what was happening during that period? Berkshire repurchased $418M during the quarter. For example, 790 class A shares at average price of around $296K per share.
"If we knew a way to put additional money into See's Candies and produce returns a quarter of what we’re getting out of the existing business, we would do it in a second... but we don’t know how to do it.” It is not easy to grow every business with a return > opportunity cost.
