In a recent appearance on the PBD Podcast, MicroStrategy (MSTR) co-founder Michael Saylor launched a strong critique of Berkshire Hathaway’s cash and Treasury bill holdings, suggesting that Warren Buffett’s company is effectively losing billions of dollars in shareholder value. Saylor specifically called out Berkshire Hathaway’s $347 billion in cash and Treasury bill position, describing it as a poor financial strategy given the current economic environment.
In the appearance, Saylor says Berkshire Hathaway (BRK.B)(BRK.B) is “destroying $32 billion a year, they are destroying $3 billion a month in capital because they’re generating a 3% after tax yield at best and the cost of capital is 15%.”
Saylor’s Critique
Saylor’s primary argument was centered around the concept of negative real yield. According to the MicroStrategy executive chairman, Berkshire Hathaway’s current cash and Treasury bill position generates a mere 3% after-tax yield, while the cost of capital is approximately 15%. This translates to a 12% negative real yield, which Saylor calculates as causing a loss of approximately $3 billion per month for Berkshire’s shareholders.
- Cash and T-bill Position: $325 billion
- After-Tax Yield: 3%
- Cost of Capital: 15%
- Negative Real Yield: 12% (15% - 3%)
- Loss Calculation: $325 billion * 12% = $39 billion annually or roughly $3 billion per month.
That $325 billion is last quarter's cash position, so the real number is even higher and growing. Saylor argues that Berkshire’s conservative approach to holding cash and Treasury bills fails to generate sufficient returns, effectively destroying shareholder value over time.
The Bitcoin Alternative
As an advocate of Bitcoin (BTCUSD), Saylor used this critique as a platform to promote Bitcoin as a superior alternative to cash or traditional low-yield assets. He suggested that given an hour with Warren Buffett, he could convince the legendary investor that Bitcoin is a valuable asset. Saylor even speculated that Buffett, known for his skepticism toward cryptocurrencies, could be persuaded to invest in Bitcoin, saying, “Charlie [Munger] would have liked it” in a reference to Buffett’s longtime business partner.
“I’d be willing to bet you that if I had an hour alone with Buffett in a calm environment, I’d walk out and he would say ‘this Bitcoin thing would be a pretty good idea’ and Charlie would have liked it and we’re going to buy some,” Saylor said.
That position seems unlikely, given that the late Charlie Munger repeatedly slammed Bitcoin. Some of Munger’s comments include saying crypto is “massively stupid” and “very dangerous,” with Charlie even going as far to say, “ I am not proud of my country for allowing this crap — well, I call it crypto shit. It's worthless, it's crazy, it's not good, it'll do nothing but harm, it's antisocial to allow it.” In that same Wall Street Journal article, Munger concluded, “I think the people that oppose my position are idiots,” and “I don’t think there is a rational argument against my position."
Given that, it’s safe to say Munger likely wouldn’t be convinced to purchase any Bitcoin, much less over a quarter trillion worth of the leading cryptocurrency. Warren Buffett has long held that he prefers revenue and value-producing businesses, and that is why he could never invest in Bitcoin. Bitcoin, like gold, oil, and real estate, doesn’t produce additional value over time. Rather, these are just appreciable assets, something Warren Buffett tends to avoid for myriad reasons.
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Context on Berkshire Hathaway’s Investment Strategy
Berkshire Hathaway, under the leadership of Warren Buffett and the late Charlie Munger, has long been known for its conservative investment strategy. The company maintains substantial cash reserves as a means of seizing opportunities in distressed markets and ensuring liquidity. This approach has historically served the company well, but Saylor’s comments reflect a growing criticism among some investors who believe that Berkshire’s strategy is outdated in the current economic environment.
Despite the recent rally in cryptocurrencies, you’d be hard-pressed to find anyone who agrees with him. Buffett’s Berkshire Hathaway is one of the few names completely unfazed by the current macroeconomic woes, and investors continue to sing his praises.
Given that, Michael Saylor’s critique of Berkshire Hathaway’s cash and Treasury bill position represents a broader debate between traditional investment principles and emerging financial strategies like cryptocurrency. His comments highlight the growing tension between conservative, value-oriented investing and the more aggressive, digital asset-focused approaches advocated by figures like Saylor.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
