Personal Finance Topics / Macroeconomic Trends and Risks
No. of Recommendations: 2
What Berkshire’s Greg Abel Should Do With All That Cash
By Steven M. Sears
Jan 21, 2026, 1:00 am EST
Sell cash secured puts.
" “A great business at a fair price is superior to a fair business at a great price,” Munger famously told Buffett, who then changed his approach and became one of history’s most successful investors.
Abel almost certainly has ideas about optimizing corporate cash, but we respectfully offer an idea that monetizes Munger’s insight in a way that many traditional stock investors fail to consider without prompting.
Abel could buy more of the great businesses in Berkshire’s portfolio at current prices, or enhance returns on the company’s massive cash position with a simple options strategy: cash-secured put sales."
https://www.barrons.com/articles/berkshire-greg-ab...
No. of Recommendations: 0
a simple options strategy: cash-secured put sales
It's simple ... for you and me. For example, almost all my holding of OXY were purchased via put options that I've sold over the years. BUT, it isn't so simple for Berkshire to do so. That's because the volumes of puts isn't high enough, and if they come in too hard, then it'll immediately affect the stock price. For example, Feb puts only have appreciable volume of 160 42.5 strike, and 310 of the 43.5 strike. That's hardly enough (basically entire volume is 47,000 shares) for Berkshire to even bother with. March isn't much more at 54 of the 40s, and 543 of the 42.5s. April is similar at 87 of the 40s, and 71 of the 42.5s.
Even if you look at total open interest, it still doesn't approach numbers that could move the needle at Berkshire.
Now, that said, I still think it's a very good way for them to slowly collect more shares of things they like at slightly better than market prices. So I would support them doing it.
No. of Recommendations: 5
Even if you look at total open interest, it still doesn't approach numbers that could move the needle at Berkshire.
That has always been my assumption, but it would be interesting to find out. For example, Berkshire built quite a large part of the BNSF position by buying $40 call options for $40 each, enough to purchase a meaningful fraction of the firm. I was surprised they could do that.
We have to remember that liquidity in a market where arbitrage or efficient hedging is possible is not a function of volume, but of bid/ask gaps. There are ETFs with almost no volume that are extremely easy to trade in a cost effective way, as even a penny move in price is enough to pull the interest of the traders. I trade options all the time which have essentially zero volume or outstanding interest other than mine.
Jim
No. of Recommendations: 0
For example, Berkshire built quite a large part of the BNSF position by buying $40 call options for $40 each, enough to purchase a meaningful fraction of the firm. I was surprised they could do that.
The market maker will accommodate you, but they will go delta neutral, so they will be buying shares. Big orders, as I mentioned, will move the stock. BNSF as I recall was something like 7.5M shares via options, a lot, but it was q liquid market. I'm thinking something like 100M shares of OXY that would require 1M option contracts. Even if the market makers could handle it, they would have to go delta neutral and that would affect the stock which would make it less attractive as the volumes rise.
I say the best way for Berkshire to go about such a thing would be to gradually do it.
I trade options all the time which have essentially zero volume or outstanding interest other than mine.
Funny that you mention this, just today I sold some puts with zero OI.
