" Buffett’s Berkshire Hathaway Set to Lose From Fed Cut
Warren Buffett’s Berkshire Hathaway was a major beneficiary of the sharp increase in short-term bond yields from 2022 through early this year. But it now stands to lose given the drop in interest rates unfolding.

The bulk of Berkshire’s cash is invested in short-term Treasury bills which have maturities of under a year.
Buffett enjoyed the high yields and security of T-bills, which were yielding 5.3% during July. They now yield 4.7% and could be down to 4% at year-end and 3% by the end of 2025 if current market rate expectations pan out.
That likely would lead to lower interest income at Berkshire in 2025 with the magnitude of the decline depending on the level of short rates and the company’s T-bill holdings.
Rising interest income has been a key source of profit growth at Berkshire so far this year while dividend income has declined slightly to $2.7 billion in the first half of 2024, largely due to the halving of the Apple stake to 400 million shares.
What’s Next: Buffett likes to take no credit or rate risk with Berkshire’s cash. He was willing to tolerate near-zero rates in 2020 and 2021, when the company generated virtually no income on its cash, and reaped the benefits in 2023 and most of this year. Now things are set to change.

—Andrew Bary"

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