In an insightful move reflecting a cautious yet opportunistic investment strategy, Warren Buffett's Berkshire Hathaway has amassed an unprecedented volume of U.S. Treasury bills, establishing itself as the foremost private entity in this market. This accumulation, significantly exceeding the Federal Reserve's holdings, underscores a deliberate pivot towards substantial liquidity and minimal risk in an unpredictable economic landscape. It also provides a robust financial base, poised for strategic deployment when compelling investment prospects emerge.
U.S. Treasury bills, or T-bills, represent short-term debt instruments issued by the American government, typically maturing within four weeks to a year. They function on a discount basis, meaning investors purchase them below their face value and receive the full amount upon maturity, with the difference constituting their earnings. Renowned for their exceptional safety, these instruments are backed by the full faith and credit of the U.S. government, making them an ideal choice for managing extensive cash reserves due to their ease of transaction and negligible default risk.
By the conclusion of the first quarter of 2025, Berkshire Hathaway's financial statements revealed a staggering $314 billion in T-bills, constituting approximately 5% of the total $6.15 trillion T-bill market. This figure represents a doubling of its previous year's position, with a substantial portion of its cash—over $305 billion—allocated to short-term government debt. In contrast, the Federal Reserve's System Open Market Account (SOMA) reported holdings of $195.4 billion in U.S. Treasury bills as of July 2025. The Fed has been systematically reducing its T-bill inventory as part of its balance sheet normalization efforts, shifting its focus towards longer-dated Treasuries and mortgage-backed securities.
Buffett's preference for T-bills stems from their inherent security and high liquidity. Amidst elevated valuations in stock markets and global economic uncertainties, this strategy reflects his patience, awaiting large, attractive acquisition opportunities. The prevailing short-term interest rates, exceeding 4%, enable Berkshire to generate billions in annual interest income with virtually no credit risk. This financial agility positions Berkshire to rapidly deploy significant capital when market disruptions or acquisition targets align with its investment criteria. Buffett has consistently highlighted the importance of being prepared to act decisively. As he articulated at the 2025 annual meeting, future opportunities would be plentiful, and holding cash ensures the capability to seize them.
Buffett has openly attributed his substantial cash and T-bill reserves to the current environment of high asset prices and a scarcity of appealing acquisition targets, succinctly stating that "Everything's too expensive."
Berkshire's commanding position in the T-bill market, now surpassing that of the Federal Reserve, major banks, and even numerous foreign central banks, serves as a powerful testament to the critical importance of maintaining liquidity, particularly during periods of market ambiguity. It underscores the wisdom of resisting the temptation to pursue excessive risk when asset valuations are inflated, prioritizing a secure foundation for future strategic maneuvers.