Transcription
Do we have any idea what uh will occur tomorrow or will that event be 3 years from now, two years from now? But there will be dislocations in markets that again will allow us to act.
That voice belongs to Greg Ael, the man Warren Buffett personally picked to run the most successful investment company of the last 60 years. And what he just said is in plain English, a warning. He's telling you he expects a market dislocation. He's telling you he's waiting for it and he's putting his money where his mouth is. As of the end of Q1 2026, Berkshire Hathaway is sitting on a record 397 billion in cash and he refuses to deploy it. He told a young investor on stage not to feel pressure to put money to work. He approved the smallest token buyback in years. He confirmed Bergkshire is now devesting businesses Buffett used to call permanent. Greg Abel's first solo meeting as Berkshire CEO wasn't a celebration. It was a warning.
By the end of this video, you're going to understand exactly what he's preparing for, why the timing matters, and why investors who ignored signals like this in 1999, 2007, and late 2019 lost half their net worth. Look, when the most successful capital allocator in modern history hands the keys to someone, and that someone immediately stockpiles a war chest larger than the GDP of most countries, you pay attention. Greg Ael didn't take the stage and try to hype the future. He didn't talk about growth. He didn't pitch new investments. He spent his first solo meeting communicating one message in plain English. We're not deploying capital and we're not in a hurry to.
To understand why that matters, you need to understand what Bergkshire actually does. They buy great American businesses. That's the whole model for 60 years. So when Bergkshire stops buying and not for a quarter, not for a year, but for 14 straight quarters, that's not a footnote, that's a signal. And Abel didn't bury it. He stated it directly from the stage.
Let's start with the number. At the end of Q1 2026, Berkshire reported $397.4 billion in cash and treasury bills, the highest cash position in the company's history. Now, Abel did something on stage that almost no CEO ever does. He actually walked back his own headline number. He told shareholders the real net figure after adjusting for Treasury timing is closer to $380 billion. Watch him lay it out himself.
>> If you look at our cash and US Treasury bills, there's a risk that people use the 397.4 billion as the headline number because that is our cash and US Treasury sitting there at the end of March. However, and we don't like these type of adjustments, but it is important to communicate it. There is 17.2 2 billion of payables associated with the treasuries that are in that total. How does that happen? We bought the treasuries right before the end of March and the payable i.e. the the the the fact we use our cash to purchase those treasuries that that occurred right after the end of March. So we've got the treasuries up in the 397 and we're still holding the cash. Accordingly, our cash in U US Treasury bills net is 380 billion. Um, and yes, it it grew by that 7 billion you can see on the slide.
Even after the adjustment, the cash pile still grew by roughly $7 billion in a single quarter. And here's what makes that crazy. Bergkshire generates over $10 billion of operating cash flow every quarter. They have so much money pouring in that they can't deploy it fast enough. So they park it in tea bills earning around 4 to 5%. The cash pile now equals roughly 30.5% of Bergkshire's total assets, the highest share in at least 3 decades.
To put that in historical context, in 1999, right before the dot bubble burst, Berkshire was hoarding cash. In 2007, before the global financial crisis took the S&P down 57%, they were a net seller of stocks with a massive cash buffer. In late 2019, before the COVID crash, they sat on roughly $128 billion. The current $397 billion is more than triple that. And every single time Bergkshire has hoarded cash at this scale relative to its size, a major dislocation has followed within 24 months.
Here's where it gets really interesting. In Q1 2026, Berkshire bought back just $235 million of its own stock. That sounds like a lot until you realize it's the first buyback Bergkshire has done in 21 months since Q2 of 2024. And it's a rounding error compared to the $400 billion dollar sitting in cash. Why does that matter? Because Bergkshire's buyback rule, written down by Buffett himself, is exact. They only repurchase their own stock when intrinsic value, conservatively determined, exceeds the current price. Abel repeated this rule almost word for word from the stage.
So, a $235 million buyback against $400 billion in cash means one of two things. Either Abel doesn't think Bergkshire stock is meaningfully undervalued at current prices even after Berkshire shares fell about 6% year-to- date, or he sees better opportunities coming and wants to keep the powder dry. Either way, it's not bullish. The CEO of the company isn't loading up on his own stock, and he's not loading up on anyone else's either. Bergkshire was a net seller of equities for the 14th straight quarter. They sold $24 billion of stock and bought just $16 billion for net sales of $8.1 billion. They've now been net sellers in every single quarter since the current bull market started in late 2022. Read that twice. The single most successful institutional buyer of US stocks in history has not been a net buyer of US stocks for three and a half years.
Then came the moment that defines Abel's whole tenure. A young investor from California named Leia stepped up to the microphone. She told Buffett his words had carried her through dark moments. Then she asked Abel a question every young investor wants the answer to. How do you know when to be patient and when to act? And Abel did something a lot of CEOs would never do. He told her not to feel pressure to deploy her money. He compared her cash to Berkshire's cash and called it an asset. He said, "Wait for the right moment." Then he closed with the line that put the whole room on notice.
>> We're we're not anxious to just deploy capital into subpar opportunities. We want to know it meets our principles and then we'll as I said earlier earlier we'll act uh decisively both quickly and with significant capital.
Pause on that. The CEO of Berkshire Hathaway in his first solo meeting told a young investor that there is no urgency to deploy capital right now because the opportunities being offered are subpar. You can read that two ways. The optimistic read is that Berkshire is just being disciplined. And disciplined investors say things like this all the time. The pessimistic read is the math behind it. The Buffett indicator, Buffett's own preferred valuation gauge, which compares total US stock market value to GDP currently sits at roughly 226%. Buffett has personally said any reading above 200% is, in his words, playing with fire. We're now sitting 16th higher than the level he himself flagged as dangerous. The Schiller PE ratio, which adjusts for inflation across a 10-year earnings window, recently hit 40.90. That's only the second time in 155 years of market data the Schiller has crossed 40. The first time was right before the dot bubble burst and the NASDAQ lost 78% of its value. So when Abel says opportunities are subpar, he's not making a feeling based argument. He's looking at the same valuation math everyone has access to and quietly concluding the price tag doesn't make sense.
Now here's something most coverage of the meeting glossed over completely. Abel deliberately staged a deep fake of Warren Buffett at the start of the broadcast. The arena watched what looked and sounded like Buffett himself say he had to step away for a phone call about a possible acquisition. Then Abel revealed it was AI. None of it was real. Watch this.
>> Anyway, Greg, I'll let you take it from here. Uh, I've got a few things on my plate. Actually, excuse me. I need to take this. Someone may want to sell me their business. Uh, I hope it's an elephant. What? Yeah.
Now, as you as you've all picked up, that was a that was a uh deep fake. Um, but but here's the interesting thing. That was that was done with zero input from Warren voice photo. You know, we we got we were able to obtain that with uh information that's out there and replicate those actions and that voice. And the reality is that's what we're dealing with when we think of Bergkshire and how we have to protect it every day. It can go to deep fakes and they're using a way to try to penetrate our business. It can be the cyber attacks, but it's a it's a great reminder for our team because that is a significant risk across Berkshire that we're managing every day.
Why does the new CEO of the most disciplined company in America open his first meeting with a fraud demonstration? Because he wants you and his shareholders to internalize that the next big systemic risk isn't trading at a PE ratio. It's coming from a server farm. Generative AI fraud is already industrial scale. Deloitte projects AI enabled fraud losses in the United States could reach $40 billion by 2027. There's a documented case where a finance worker at a Hong Kong firm wired $25 million after a video call where every other participant on screen was a deep fake. Think about what that means for a moment. The CFO was on the call. The colleagues were on the call. The instruction to wire the money was given over video. And not a single human face on that screen was real. That's not a future threat. That happened.
So, right after Abel showed the clip, he turned to Ajet Jane, Bergkshire's vice chairman of insurance, the man who has personally underwritten more catastrophic risk than maybe anyone alive, and asked him what Bergkshire's exposure to cyber actually looks like. Ajet's answer is the part that should keep insurance executives up at night.
Firstly on cyber I find it very difficult to have some meaningful method to assess and model the aggregation. uh people will tell you we've got it under control and they'll show you all kinds of models but nothing that I can really hang my hat on in terms of we really have a good feeling for what the aggregate exposure is because any risk we take on the first question we ask ourselves how bad can bad be and I'm not sure we can answer that question as well as we should.
Translate that for a second. The single best risk modeler at Berkshire just said the quiet part out loud. Cyber risk cannot currently be modeled. The aggregate exposure is unknowable. And that's why Bergkshire, one of the largest property and casualty insurers in the world, has refused to underwrite cyber at scale.
Now stack that against what Ajet said about the broader insurance market in the same meeting. So right now in the insurance sphere the supply is greater than the demand and that makes it very difficult to be able to carve out a deal that rationally is good for the buyer and the seller. Uh when supply is greater than demand then it's the seller that loses. When the supply of insurance capital exceeds demand, insurers have to write business at lower prices to keep market share. That's what a Jeet means when he says the seller loses. Historically, periods like this have preceded turbulence. Soft insurance markets in 1999 and 2006 both ended with massive payouts that wiped out under capitalized carriers. So Berkshire is doing the opposite. They're writing less premium, not more. They're letting competitors pile in at low prices and waiting for the cycle to turn.
And it's not just cyber and not just insurance. The signals underneath the headline numbers all point the same way. GEICO, Berkshire's flagship auto insurer, grew policies just 2% in Q1, while its main competitor, Progressive, grew 11%. Even the crown jewel is losing share. Abel said directly from the stage that restarting GEICO's growth engine isn't going to be easy. Clayton Homes, Berkshire's manufactured housing business and a leading indicator for the workingclass consumer, saw home volumes drop roughly 10%. The sightbuilt homes division is down around 5% and the broader industry is tracking 7% lower year-over-year. The chemical division saw input costs effectively double in a short window because of the war in Iran. Petroleum is the input for almost everything they produce and prices reset overnight.
None of these are doom level numbers on their own. But put them together, softening insurance pricing, contracting auto market share, falling consumer durables, doubling industrial input costs, and the picture is unambiguous. The American economy underneath Berkshire is cracking and Abel is not buying the dip.
Then came the most under reported line of the entire meeting. A shareholder asked Abel directly, "Would Berkshire ever divest businesses or break itself up?" Buffett built Bergkshire on the principle that we hold forever. It was the moral architecture of the company. Abel confirmed, "They're already breaking that rule." He acknowledged Berkshire has announced the sale of Pacific Corpse Washington State Utility, a piece of one of Berkshire's largest energy businesses. He framed it as a regulatory mismatch. But the precedent is what matters. The man Buffett picked is openly telling you Bergkshire will divest when the math doesn't work. That is a structurally different company than the one Buffett ran for 60 years.
And Aget reinforced the philosophy when he described how he trains his underwriters. He said when he recruits people, his entire approach is to tell them their job is to say no. The base case is no. Once in a while, a deal hits you with a 2x4 and screams money. That's when you act. The rest of the time, you sit on your hands. That mandate isn't just about insurance. It's about how Berkshire is positioning every dollar in 2026. Even Bergkshire's biggest active deployment of capital this year, the $1.8 billion stake in Japan's Tokyo Marine was structured outside the United States and capped at 9.9% ownership. They're explicitly moving capital away from US equities and toward markets where the math still works.
Zoom out. There's a wave of CEO transitions hitting Berkshire's biggest holdings simultaneously. Right at the moment, macro risk is rising. Tim Cook is stepping down at Apple effective September 1st, 2026. James Quincy just handed off Coca-Cola at the end of March. Vicky Hollowup is leaving Accidental in June. Doug McMillan already retired from Walmart in February. Apple, Coke, Accidental, Walmart. Four of Berkshire's largest equity positions, all changing CEOs in the same year. The old guard is leaving the building at exactly the moment the macro environment is getting more dangerous. And these aren't normal handoffs. These are operators who built their reputations through the 2008 crisis and the co crash. The new CEOs are stepping in cold with no comparable scar tissue into the most overvalued market in over a century.
And Buffett himself, sitting in the audience for the first time in 60 years, gave the most cinematic warning of the day. In a sitdown interview with CNBC's Becky Quick during the lunch break, he said that of his 60 years of investing, only about five of them were really juicy, meaning rich with opportunity. The implication, today is not one of them. He compared today's market to a church with a casino attached, and said current valuations mean prices for an awful lot of things will eventually look very silly. Then the line that summarizes everything Abel was saying in measured corporate language. Something will come out of the blue.
Here's the thing nobody is saying out loud. The smartest capital allocator in the world built a $400 billion war chest and his successor is sitting on it. They're not buying their own stock in any meaningful size. They're not buying anyone else's stock. They're divesting businesses they used to call permanent. They refuse to underwrite the biggest emerging risk because they admit they can't model it. They're explicitly waiting for a dislocation. None of this is hidden. None of it is even subtle. Greg Ael told you on stage in plain English. The question isn't whether the warning was given. It was given. The question is whether you were listening. Because in 1999, in 2007, in late 2019, every single time Bergkshire hoarded cash on this scale relative to its size, the market broke within 2 years. We are now at a higher concentration than any of those moments. And the man at the wheel just told 30,000 shareholders in Omaha that he's waiting for things to break.