Africa-Press – South-Africa. Warren Buffett’s Berkshire Hathaway is sitting on a record cash pile worth $334 billion (R6.28 trillion), which is enough to buy South Africa’s largest 15 companies and still have R2.31 trillion to spare. Berkshire can also buy 476 companies, on an individual basis, within the S&P500 using its cash pile.
The ten most valuable companies headquartered in South Africa include internet giant Naspers, banking giants FirstRand and Standard Bank, and the two largest telecoms companies on the continent, Vodacom and MTN. In February, Buffett revealed a record cash pile in Berkshire’s annual results for the 2024 financial year and was at pains to justify it.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change,” Buffett wrote in his annual shareholder letter.
“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities, although many of these will have international operations of significance.”
Buffett made it clear that Berkshire would never prefer the ownership of cash or cash-equivalent assets over the ownership of good businesses. Berkshire has steadily built up its cash pile over the past few years, declining opportunities to reinvest dividends and steadily trimming its largest holdings.
In particular, Buffett slashed Berkshire’s stake in Apple and significantly reduced the company’s holdings in Bank of America and Wells Fargo. Buffett’s actions in 2024 sent a clear message that the greatest investor in history preferred to sit on cash rather than buy more stocks in a highly valued market.
This approach has reaped rewards so far for Berkshire investors, with the company’s shares up over 12% this year while the S&P500 has lost 11%. Many commentators have praised Buffett amid the ongoing market turmoil and volatility, with his cash pile ready to be deployed by picking up high-quality assets relatively cheaply.
How Buffett could invest Berkshire’s cash
Investors will have to wait to see whether Buffett has found opportunities to deploy Berkshire’s cash pile during the United States equity market’s worst quarterly performance since 2022.
Berkshire has to file its quarterly report ahead of its 3 May shareholder meeting and is required to file a form detailing its major holdings by 15 May.
This, along with Buffett’s comments from the May annual general meeting, will give investors some insight into how the Oracle of Omaha is allocating capital.
Investing on the scale that Buffett operates is immensely difficult, with very few companies able to move the needle meaningfully for Berkshire. With an investment portfolio worth $266.57 billion, excluding cash, Buffett must deploy billions to generate meaningful returns.
Buffett is searching for opportunities. The legendary investor said the United States financial system requires less of what Berkshire had done – saving – and more “imaginative” deployment of any accumulated capital back into the economy.
“One way or another, the sensible – better yet imaginative – deployment of savings by citizens is required to propel an ever-growing societal output of desired goods and services,” Buffett wrote in his shareholder letter.
“This system is called capitalism. It has its faults and abuses – in certain respects more egregious now than ever – but it also can work wonders unmatched by other economic systems.”
Buffett will have to be imaginative as he has enough cash to snap up 476 companies, on an individual basis, in the S&P500. Closer to home, Buffett could buy all of the 15 most valuable South African companies and still have R2.31 trillion to spare.
Buffett’s $334 billion cash pile is equal to R6.28 trillion, and South Africa’s 15 most valuable companies are valued at R3.97 trillion altogether. Their valuations are shown in the table below.
CompanyMarket CapitalisationNaspersR724
billionGoldFieldsR401.49
billionFirstRandR395.92 billionStandard
BankR370.86 billionCapitecR358.45
billionVodacomR260.54 billionHarmony
GoldR211.10 billionMTNR207.21
billionAmplatsR190.09 billionSanlamR175.88
billionShopriteR166.39 billionBid
CorpR149.92 billionDiscoveryR132.26
billionNedbankR121.53
billionOUTsuranceR107.69 billionTotalR3.97 trillion ($211.64 billion)
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