Berkshire’s $400B Cash Pile + How to Buy Private AI Companies
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What insights did Greg Abel share at Berkshire Hathaway's annual meeting?
Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business.
Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.
If there's uncertainty in the markets, there's going to be some great opportunities for investors.
This has to be one of the biggest quarters I've seen from this company in quite some time.
Welcome back to the Canadian investor podcast. I'm back with Dan Kent. We have a really fun episode coming up. We'll be talking a whole lot about the Berkshire Hathaway annual shareholder meeting. So Berkshire Hathaway is sitting on almost 400 billion in cash, the largest cash pile in history. And depending on how you look at it, that is either a sign that Berkshire has become too cautious or a sign that most investors have become too impatient. And you really see both sides of the argument looking on social media. That's really the tension from this year's Berkshire meeting. This was the first annual meeting led by Greg Abel since becoming CEO. And I think a lot of investors were watching for one big thing.
Does the Berkshire Hathaway playbook change without Buffett fully at the helm? And based on what we've heard, the answer seems to be no. Greg Abel clearly has a different style. Buffett was more big picture. Abel gets more into the weeds, operations, margins, efficiency, railroads, energy, AI, and how these subsidiaries can improve. But the core philosophy sounds very familiar. Be patient, stay liquid, do not chase deals, do not do something just because the market wants action, and when the right opportunity comes, be ready. And that might sound simple, but it is actually very hard to do in real time because when markets are moving higher, cash looks lazy. Discipline looks stubborn and patient can look like a mistake until that environment changes.
Yeah, and I think that is the really important setup for the episode today because Berkshire is almost the complete opposite of where a lot of investors' attention is right now. So, I mean, we look to AI. A lot of people are asking, how do I get access to OpenAI, Anthropic, Stripe, or other private companies before they go public? And I do get it. Some of the most exciting companies in the world are staying private longer. By the time they IPO, a lot of the value might have already gone to founders, employees, venture funds, sovereign wealth funds, large institutions. So retail investors kind of naturally wonder... why can't I get in earlier? And the question is pretty fair. If more value creation is happening before the IPO, then public market investors are right to ask why they're showing up late to the party.
And I think we're going to go over this after the Berkshire call, kind of how to get access to these funds, or sorry, these opportunities before they go public.
Exactly, but that's where investors need to be careful. Access is not the same thing as opportunity. Just because you can buy a private company does not mean you are getting a good deal. Private markets can come with high fees, poor liquidity, limited information, widespread lockups, and a lot of uncertainty around valuation. And that's very different from buying a public stock where you can see the financials, compare the valuation and sell if your thesis changes. So today, we're going to look at both sides of this. On one side, you have Berkshire sitting on a mountain of cash, refusing to swing at bad pitches.
How is Berkshire Hathaway's cash pile impacting its investment strategy?
And on the other side, you have investors trying to get early access to the next great private company. And somewhere between those two extremes is a pretty important lesson for investors because the question is not just, can I get access? The better question is, do I actually have an edge once I get access?
Yeah, that's the key distinction because a lot of investors assume being earlier automatically means you have a better opportunity, but earlier can also mean less information, less liquidity, worse terms, much harder time figuring out what the investment is actually worth.
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Chapters
6 chapters
1
What insights did Greg Abel share at Berkshire Hathaway's annual meeting?
0:01–3:48
2
How is Berkshire Hathaway's cash pile impacting its investment strategy?
3:48–6:54
3
What changes in management style can we expect under Greg Abel?
6:54–14:22
4
How can investors access private AI companies before they go public?
14:22–19:13
5
What are the risks of investing in private companies?
19:13–27:41
6
How do accredited investor rules affect access to investment opportunities?
27:41–55:06
Speakers
3 identifiedMore from The Canadian Investor
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