Berkshire Hathaway, under the leadership of Warren Buffett, has dramatically escalated its investments in U.S. Treasury bills, now holding a larger share than the Federal Reserve itself. This strategic pivot underscores a deliberate emphasis on security and readily available capital during a period marked by high market valuations and global economic ambiguities. The company's significant accumulation of these short-term government debt instruments, amounting to approximately $360 billion by the close of the third quarter of 2025, reflects a cautious stance designed to preserve capital and generate income with minimal risk.
Treasury bills, commonly known as T-bills, represent a class of short-term government debt issued by the United States, with typical maturities ranging from four weeks to a year. These securities do not offer regular interest payments but are instead sold at a discount to their face value. Investors realize their return from the difference between the discounted purchase price and the full face value received upon maturity. Renowned globally for their safety, T-bills are considered virtually risk-free due to the backing of the U.S. government's full faith and credit. Their high liquidity and minimal default risk make them an ideal choice for managing substantial cash reserves.
A notable shift has occurred in the landscape of Treasury bill ownership. By the end of the third quarter of 2025, Berkshire Hathaway's stake in T-bills reached an estimated $360 billion, constituting roughly 6% of the total $6.15 trillion T-bill market. This figure represents a twofold increase compared to its holdings from the previous year. In contrast, the U.S. Federal Reserve's System Open Market Account (SOMA) reported holdings of just over $195 billion in T-bills as of November 2025. The Federal Reserve has been systematically reducing its T-bill portfolio as part of a broader strategy to shrink its balance sheet, reallocating its focus towards longer-term Treasury securities and mortgage-backed assets.
Several factors underpin Berkshire's substantial investment in Treasury bills. Firstly, their inherent safety and high liquidity are paramount. With equity markets trading at elevated levels and a cloud of uncertainty hanging over global economic growth, Buffett opts for a patient approach, awaiting opportune moments for significant, attractive acquisitions. This strategy allows the firm to maintain its financial strength while avoiding overvalued assets. Secondly, the prevailing attractive yields on short-term rates, often exceeding 4%, enable Berkshire to generate billions in annual interest income without incurring significant credit risk. This steady, low-risk income stream provides a buffer against market volatility. Lastly, holding a vast reservoir of T-bills affords Berkshire considerable strategic flexibility. It empowers the company to deploy large sums of capital swiftly when market dislocations or compelling acquisition opportunities emerge, a principle Buffett has consistently championed. He has often articulated the advantage of having cash ready to act decisively, remarking on the anticipation of numerous opportunities for which readily available capital would be invaluable.
Buffett has consistently voiced concerns regarding inflated asset prices and a scarcity of appealing acquisition targets as primary motivations for maintaining a substantial cash and T-bill position. His assessment that "everything's too expensive" reflects a cautious market outlook. This accumulation of Treasury bills places Berkshire's holdings beyond those of the Federal Reserve, numerous banks, and even many foreign central banks. For market participants, this serves as a powerful testament to the critical role of liquidity during periods of uncertainty and the wisdom of resisting the urge to chase returns when asset valuations are stretched.