Warren Buffett says he’s still making calls on investments at Berkshire, flags ‘tiny’ new buy

Berkshire Hathaway purchased $17 billion of Treasury bills at the weekly auction and reported more than $370 billion in cash equivalents at year-end. Warren Buffett, 95, said he remains hands-on in investment decisions despite handing the CEO role to Greg Abel in early 2026 and noted he recently made "one tiny purchase." Buffett described daily coordination with director of financial assets Mark Millard and downplayed current market volatility versus historical >50% drawdowns.

Analysis

Perceived continuity in stewardship reduces a classic ‘post-succession’ governance haircut. For a conglomerate with a wide mix of operating businesses, that can translate into a measurable compression of the holding-company discount as longer-term capital-allocation predictability rises — think mid-single-digit re-rate potential over 12–24 months versus an unchanged macro backdrop.

Large, persistent allocations into ultra-short Treasuries act as a technical bid that disproportionately affects the front end: weekly auctions and dealer balance-sheet dynamics see transient supply–demand imbalances that can lower bill yields and tighten bill–note spreads by a few basis points. That subtle front-end flattening benefits cash-centric asset managers and constrains short-term funding costs for corporates and money-market products, while increasing reinvestment risk for fixed-income allocators.

Signal interpretation risk is asymmetric: the market tends to over-interpret incremental moves from marquee allocators, generating short-term sentiment-driven volatility without changing longer-term fundamentals. Key catalysts that would materially change the view are a genuine shift into equities at scale (would push syst. equity flows and valuation rerates) or a regulatory/tax change altering attractive parking of cash — both are lower-probability but high-impact over 3–24 months.

Key Decisions for Investors

• Pair trade (12-month): Long BRK.B (2–3% portfolio weight) / Short IVV equal dollar. Rationale: capture governance re-rate and conglomerate optionality while hedging beta. Target +15–25% gross on BRK.B vs S&P outperformance; stop-loss if pair underperforms by 12%.
• Short-term front-end yield play (3–6 months): Buy BIL or SHV to capture elevated short-term relative demand & carry as technical bids persist. Expect modest absolute returns (~1–3% annualized carry over the period); principal risk is sudden front-end curve steepening if auction demand collapses.
• Volatility fade (30–90 days): If name-specific implied volatility spikes on headlines, consider selling near-term BRK.B covered calls or credit spreads (60–90 days) to harvest premium; reward-to-risk attractive if headline-induced IV isn't backed by fundamental repositioning. Keep max assignment scenario sized to <1% portfolio.
• Contrarian catalyst hedge (18–24 months): Buy put protection on BRK.B (one-year OTM puts) sized modestly as insurance against a governance shock or major equity drawdown. Cost justified as tail-hedge given potential for abrupt repricing if capital-allocation policy materially changes.