Lower Interest Rates Yield a Loser: Berkshire Hathaway
Berkshire Hathaway was a major beneficiary of the sharp increase in short rates from 2022 through early this year but now stands to lose given the drop in short rates now unfolding with the Federal Reserve's half-point cut in a key short rate Wednesday.Berkshire had the largest holdings of cash and equivalents of any U.S. company at $277 billion at the end of the June, compared with Apple at $153 billion and Alphabet at $101 billion.The bulk of Berkshire's cash is invested in short-term Treasury bills which have maturities of under a year. Berkshire CEO Warren Buffett is partial to three and six-month T Bills that are auctioned weekly by the Treasury. Berkshire held $234 billion of T-Bills at the end of June.Berkshire's interest and other investment income was up sharply in the first half of 2024, rising 80% to $4.5 billion before taxes from $2.5 billion in the year-earlier period. That increase reflects higher short rates and larger cash balances as Buffett sold almost $100 billion of