Warren Buffett is doing something interesting. Here's what I think is going on

Warren Buffett is one of the most respected investors of any generation. As a result, the actions he takes with his portfolio Berkshire Hathaway (NYSE:BRK.B) attract attention. So over the past year or so, something interesting has been noted in the company's reviews. Here's what I think it means and what I can learn.

Big numbers

Simply put, Buffett is raising money like never before. In a recent report, it showed that Berkshire has a cash pile of $277bn. That may sound like a lot of money… because it is! In theory, it's the biggest catch yet an apple. The market value of this holding is $87.3bn. Next is the biggest American Express for a value of just over $38bn.

So the funds held far exceed the value of any individual stock held. Interestingly, Berkshire Hathaway's market capitalization is $964bn. So the deductions make up a decent portion of the company's net worth.

Why do I think it's happening

The cash balance has always been this high, but it has grown rapidly over the past few years. I feel this is down to a few reasons. First, Buffett hasn't bought anything big recently. This shows me that he can't find any stocks attractive enough. Of course, there are opportunities in the stock market. For example, there are good stocks with high dividend yield. But Buffett focuses his strategy on buying undervalued stocks that he feels will do well in the long term. So with his direct focus, he can't get good ideas.

Another reason why he can build his cash is because of the power of the stock market correction. It's true that across the pond, stock markets have been flying. For example, i Nasdaq 100 up 25% over the past year. For a major stock index, that's pretty impressive. However, it may also indicate that a correction is coming, as investors begin to book some profit and reduce their risk. If this happens, Buffett would be well placed to use his dry powder to pick up some stocks at a cheap level.

Being different

I don't see myself buying Berkshire Hathaway shares anytime soon. However, I always follow what's going on in the company because of what I can gather about Buffett's thinking. This time, my portfolio setup is a little different. The main reason I don't collect cash is because I invest in the UK market. As a result, the ratings are very attractive at the moment.

In addition, I have a combination of dividend, growth and value ideas in my portfolio. So while I understand why Buffett is increasing his cash balance, it won't overly influence my decision making right now.