Billionaire Charlie Munger reveals why Berkshire Hathaway has a $88 billion cash pile

The S&P 500 plummeted 19% in 2022, but stocks still don’t look cheap to Charlie Munger, Warren Buffett’s billionaire partner at Berkshire Hathaway.

“In my entire adult life I have never hoarded cash and waited for better conditions,” Munger said in an interview in late 2022. “I just invested in the best I could find.”

However, he did acknowledge that Berkshire Hathaway is sitting on billions of dollars in cash. The reason isn’t that Buffett and Munger think they can wait for stocks to get even cheaper — the bet known as “timing the market.”

Instead, Munger bluntly said that Berkshire isn’t buying anything “because there’s nothing we can buy.”

It’s an amazing statement. Even during a stock market downturn that would likely result in dozens or hundreds of stocks selling off at bargain prices, the world’s most famous value investors are not remotely tempted to jump in.

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Berkshire Hathaway — and every other big name in finance — is somewhat limited in what it can do. By law, large financial institutions and billionaire investors can’t buy more than 5% of a company without filing a 13-D beneficial ownership filing with the Securities and Exchange Commission and all the associated headaches.

This essentially locks Buffett out of the world of microcap investing — unless Berkshire Hathaway decides to jump through those regulatory hurdles. And even if the company did go along with it and uncovered a 10x opportunity, the upside for Berkshire Hathaway would be barely noticeable. Turning a $2 million stake into $20 million wouldn’t make a difference for a company that collects hundreds of millions of dollars in dividends each year just from its stake in Coca-Cola.

For investors: But for ordinary investors, it’s a different story. The world of start-up investing – legally closed to everyday investors for decades – is now open to the masses. For example, RAD AI is the world’s first AI marketing platform built to understand emotions and is already being used by some of the largest companies in the world. The startup has already raised over $3.1 million from private investors.

The story goes on

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This article Billionaire Charlie Munger reveals why Berkshire Hathaway has a $88 billion cash pile originally appeared on Benzinga.com

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