Warren Buffett and the rest of Berkshire Hathaway's (NYSE: BRK-A)(NYSE: BRK-B) management have had a lingering problem for some time: Cash continues to build up on the balance sheet and there hasn't been any attractive way to put it to work. At the end of 2017, Berkshire had more than $116 billion in cash and equivalents -- far more than the $20 billion or so Buffett likes to keep on hand.
To be clear, having a hundred-billion-dollar cash stockpile is a good problem to have, but it's still a problem. This is money that, instead of generating returns that can then be reinvested, is sitting around earning next to nothing in short-term treasuries.
Shareholders finally got some good news on this front. In Berkshire's first-quarter earnings report, the company's cash position went down for the first time in years.
Berkshire's cash stockpile -- where it stands today
As of March 31, 2018, Berkshire reported a total of $108.6 billion in cash in its quarterly report. This is down by about $8 billion during the first three months of the year. While it still leaves Berkshire with almost $90 billion more in cash than the company wants, it's definitely a step in the right direction.
RELATED: Warren Buffett through the years:
Warren Buffett through the years
Warren Buffett through the years
Investor Warren Buffett answers reporters' questions during a press conference to announce that Walt Disney will buy Capital Cities/ABC July 31.
Billionaire investor Warren Buffett of Omaha makes a rare public appearance during an autograph session outside Borsheim's Jewelry Store in Omaha, May 4. Buffett was signing autographs for shareholders in his company, Berkshire Hathaway, which is having its annual meeting May 5.
Billionaire businessman Warren Buffett sits with his wife Susan (R) and daughter Susie, prior to the annual Berkshire Hathaway shareholders meeting in Omaha, May 5. This marks a rare public appearance for the reclusive Buffett.
Arnold Schwarzenegger, Republican candidate for governor of California
in the October 7, 2003 recall election listens as world famous
investor, Warren Buffett (L), one of his financial advisors, speaks to
reporters after a meeting of Schwarzenegger's Economic Recovery Council
in Los Angeles August 20, 2003. REUTERS/Fred Prouser
Billionaire financier Warren Buffett looks on after a meeting with U.S. Senator Arlen Specter (R-PA) and chairman of the Senate Judiciary Committee, at the Hart Senate Office Building on Capitol Hill in Washington June 29, 2005. Specter is the co-author of a bill seeking to create a $140 billion asbestos compensation fund. REUTERS/Shaun Heasley SH/TC
Billionaire Warren Buffett arrives at the Sun Valley Resort in Sun Valley, Idaho July 10, 2007. The world's biggest media chiefs gather this week at the 25th annual Allen & Co. conference at the resort starting today. REUTERS/Rick Wilking (UNITED STATES)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at a Senate Finance Committee hearing about "Federal Estate Tax: Uncertainty in Planning Under the Current Law" on Capitol Hill in Washington, November 14, 2007. Billionaire Buffett warned of widening U.S. income disparity and endorsed the estate tax as a check on wealth accumulation, while two senior lawmakers said they want the tax repealed. REUTERS/Jason Reed (UNITED STATES)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett greets shareholders during the Berkshire Hathaway Annual Shareholders meeting in Omaha, Nebraska May 3, 2008. REUTERS/Carlos Barria (UNITED STATES)
Billionaire investor Warren Buffett laughs as he appears with Microsoft Corporation founder Bill Gates for a town hall style meeting with business students broadcast by financial television network CNBC at Columbia University in New York, November 12, 2009. REUTERS/Mike Segar (UNITED STATES BUSINESS)
Berkshire Hathaway Chairman Warren Buffett kisses his ukulele at the Berkshire Hathaway annual meeting in Omaha May 1, 2010. Buffett played "I've Been Working on the Railroad." REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS TRANSPORT)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett (L) and Microsoft founder Bill Gates gesture at the national launch ceremony for the BYD M6 vehicle in Beijing September 29, 2010. Chinese battery and car maker BYD, backed by Buffett, launched its first premium multi-purpose vehicle (MPV) in Beijing on Wednesday to tap rising demand in the world's biggest auto market. REUTERS/Jason Lee (CHINA - Tags: TRANSPORT BUSINESS)
Billionaire Warren Buffett, wearing a traditional tikka or a red mark on the forehead, speaks during a news conference in Bangalore March 22, 2011. Buffett on Tuesday said he is looking to invest in large countries like India, China and Brazil, but added that restrictions on foreign ownership in India's insurance industry could be a deterrent. Buffett also said and the U.S. economy was improving and that the devastating earthquake in Japan would not hurt global growth. REUTERS/Stringer (INDIA - Tags: BUSINESS)
Berkshire Hathaway Chairman Warren Buffett tours the floor of the New York Stock Exchange September 30, 2011. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS)
Berkshire Hathaway chairman Warren Buffett holds his hand over his heart during the singing of the national anthem, at the start of a 5km race sponsored by Brooks Sports Inc., a Berkshire-owned company, in Omaha May 5, 2013, a day after the company's annual meeting. Buffett at the meeting on May 4, 2013 gave the most extensive comments to date about the future of Berkshire Hathaway Inc after he is gone, saying he still expects the conglomerate to be a partner of choice for distressed companies. REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS SPORT ATHLETICS)
Warren Buffett, Chairman of the Board and CEO of Berkshire Hathaway, poses for a portrait in New York October 22, 2013. REUTERS/Carlo Allegri (UNITED STATES - Tags: BUSINESS)
Roberta Buffett Elliott sits with her brother Warren Buffett as they attend an announcement ceremony at Northwestern University in Evanston, Illinois, January 28, 2015. The sister of financial investor Warren Buffett has given Northwestern University more than $100 million to create the Roberta Buffett Institute for Global Studies, the largest single gift in the school's 164-year history, the university said on Wednesday. REUTERS/Jim Young (UNITED STATES - Tags: BUSINESS EDUCATION SOCIETY)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune's Most Powerful Women's Summit in Washington October 13, 2015. REUTERS/Kevin Lamarque/File Photo
Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles before speaking with Bill Gates (not pictured), at Columbia University in New York, U.S., January 27, 2017. REUTERS/Shannon Stapleton
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Where did Berkshire's cash go?
Not only did Berkshire start 2018 with more than $116 billion, but its operating businesses had positive cash flow of about $7.6 billion during the quarter. The primary reason that figure now is lower is because Buffett and Berkshire's stock pickers have had success finding attractively priced investment opportunities in the stock market.
Just recently, it was revealed that Berkshire added another 75 million shares of Apple during the first quarter, and Berkshire's quarterly report indicates net equity purchases of nearly $14.8 billion in that time. Even if Apple was purchased at its first-quarter highs, this still leaves more than $1.5 billion that was used to buy other stocks -- not counting the proceeds from any stocks that were sold (like IBM, which Buffett announced was completely disposed of during the quarter).
We'll have to wait for Berkshire's upcoming 13-F to see exactly what was purchased, but the point is that Berkshire's stock-picking team had a much-needed busy quarter.
Could the rest of 2018 be full of more buying?
The stock market still is down significantly from its highs, so it's entirely possible that Berkshire's rather aggressive stock investing could continue. What Berkshire would really like, however, is to find a company to acquire in its entirety. Although we have no way to know what the company is looking at right now, some of Buffett's comments during Berkshire's annual meeting indicate that there may be a better environment for acquisitions than there was during 2017.
As an example, when asked about his two investment managers Ted Weschler and Todd Combs, Buffett pointed out that there's a deal under consideration right now that was brought to Berkshire by one of the two men. The tone a year ago was more to the effect of "we can't find anything attractive to invest in."
That's changed now -- at least in terms of stock investments. We'll have to wait and see if there are any acquisitions coming soon, but so far, 2018 is looking far more promising for Berkshire shareholders who have been patiently waiting for the company to put its cash to work.