Berkshire Hathaway ended the first quarter of 2026 with nearly $400 billion in cash and short-term investments, and the Federal Reserve appears to be leaning toward rate increases. CEO Greg Abel, who succeeded Warren Buffett, saw the cash balance rise in his first quarter at the helm, continuing the practice of holding cash when attractive investments are scarce. The company largely holds short-term U.S. Treasury Bills, with $339 billion in such securities, and as those bills roll over, Berkshire buys new ones at current rates, which could increase income if rates stay high or rise. The Fed's target range for the federal funds rate is currently 3.5% to 3.75%, and after new Fed chief Kevin Warsh held rates steady at his first meeting, indications suggest rates will remain at current levels or perhaps rise. This makes Berkshire's cash a safety valve, a source of capital, and increasingly a valuable source of income, setting Abel up to buy when others are fearful.
Berkshire Hathaway IncBerkshire's large cash holdings earn more income if the Fed raises or holds rates, boosting earnings.