In this article we are going to list the 15 companies with the most cash reserves in America. Click to skip ahead and jump to the 5 Companies With The Most Cash Reserves In America.
The Covid-19 pandemic has destroyed the economy in a way that no one thought possible. Back when the economy of the United States crashed in 2008 – 2009, and the rest of the world followed suit, few people thought they would face an even worse disaster in 202o, just over a decade later. But that is what happened in 2020, when the novel coronavirus pandemic, which originated in China, spread across the world, leading to over 170 million cases as well more than 3.5 million deaths. These figures themselves are likely to be extremely understated and we will know the true impact of Covid-19 in the coming years.
As countries started imposing lockdowns to battle this virus for which they had no solution, economies, which are entirely dependent on lockdowns, well, not happening. Most industries faced significant losses as economies collapsed and most countries across the globe entered into either recessions or depressions. Many companies had to incur massive losses as well as major layoffs, as demand for most industries fell and going at the same rate as pre-pandemic made no sense at all.
Even though, as I mentioned, most industries and companies suffered, some actually came out of the pandemic smelling like roses. Take Tesla for example. The market cap of the company jumped astronomically during 2020, making even ordinary shareholders into millionaires and making Elon Musk the richest man in the world and the highest earning billionaire in 2020 as well as the richest man in the world for a while. Tech companies generally managed quite well in fact, with many companies reporting higher sales and profits as demand for tech increased while more and more people continued to work from home.
Another example is Apple Inc. (NASDAQ:AAPL) which is among the companies with the most cash reserves in America. Apple Inc has nearly $200 billion in cash and marketable securities. One would think that with a large number of its stores closed Apple would have suffered dearly during the crisis. Fortunately for Apple Inc. (AAPL) shareholders the company did well during the past 12 months and AAPL shares performed even better. The company used some of its cash hoard to continue paying dividends and buy back shares. Apple Inc. should have used its massive cash hoard to snatch some EV and battery companies on the cheap.
Another technology stock that is among the companies with the most cash reserves in America is Facebook Inc. (NASDAQ:FB). Facebook Inc carries more than $60 billion in cash on its books, and despite this huge buffer Facebook shares declined all the way down to $140 in March 2020. Mr. Market misjudged Facebook’s potential for a few days, but investors had a change of heart after a few weeks and Facebook shares returned more than 120% since its March 2020 lows. Unfortunately Facebook Inc’s management didn’t put its huge cash hoard into good use and take advantage of the opportunities.
Most of the companies that made our list of the 15 companies with the highest cash reserves in America are tech companies but you can also find non-technology stocks like Costco (NASDAQ:COST), JP Morgan Chase (NYSE:JPM), and Ford (NYSE:F) on our list. Costco was one of the beneficiaries of the 2020 coronavirus pandemic but JP Morgan Chase and Ford shares suffered large losses despite their cash reserves.
It would make sense that tech companies have massive cash reserves. Due to the high value of shares of these companies as well as the fact that their products are generally highly priced with significant margins, these companies tend to have a lot of surplus cash on hand. However, having a lot of excess cash can also be often considered to be a failure on the part of the company, to have the cash simply lying around when it could be put to better use, say on investing activities or to pay off debts, which would allow the company to save significant money on interest payments. On the other hand, having too little cash can give the signal that the company has liquidity issues and can also be perceived negatively by investors and shareholders. Therefore, there is a fine balance to maintain, one which many companies are able to maintain while others are not.
However, in the era of Covid, where the economy needs significant boosts, it is frustrating many people, including Wall Street that companies are sitting on massive piles of cash and yet, are refusing to utilize it. As I mentioned earlier, companies can use it for investing activities as well as acquisitions, or by returning money to shareholders in the form of dividends, which would gain them goodwill in an unprecedented year. Another option is buyback of shares from shareholders, though detractors argue that this is simply a short term boost for investors while resulting in a long term effect on the health of a company.
Of course, the simple reason would be that this isn’t the best time really, to spend money. The market is uncertain, the economy will take a while to recover and while there is optimism on the horizon with vaccines being administered, it is still a long haul process and not an immediate one. Hence, companies are a bit cautious in investing money. Further, the biggest companies in the world are also really big on acquisitions, with Apple acquiring a hundred companies over the last 6 months. That means an acquisition every three to four weeks. Furthermore, tech companies, famous for having a lot of cash on hand, are also known for sitting on said cash. And even though this doesn’t mean that these companies are not spending cash at all, it’s just that many analysts believe that these companies are not doing as much as they do.
Coming up with the list of companies with the largest cash reserves in America was not an easy task. Search on the internet and you’ll generally find tech companies and even then, those articles are often outdated. Most people want to know the reserves that companies have now, one year after the Covid-19 pandemic, rather than back in 2019 or 2018. Hence, we selected the biggest companies from the Fortune Global 500 list, and focused particularly on the tech industry, as it is true that these companies tend to have the most cash. We have selected the latest quarterly reports for each company and scoured the balance sheet to find out the cash reserves that these companies own. Due to the high liquidity of marketable securities, we have considered them among cash equivalents as well, though most other types of investments, including long term investments, have not been considered. Together, these companies hold more than $1.1 trillion in cash alone, which is truly an astonishing amount. So without further ado, let’s take a look at the companies, which combined have more cash than most countries in the world, starting with number 15:
15. Cigna (NYSE:CI)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 10,182
Cigna is among the biggest healthcare companies in the world, and also has plenty of cash reserves to manage any possible tough times.
14. Cisco (NASDAQ:CSCO)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 11,809
Cisco ranks 14th on our list of the companies with the most cash reserves in America. Our list has plenty of tech companies, and Cisco is no different, involved in the manufacture of networking hardware, telecommunications equipment and software.
13. Costco (NASDAQ:COST)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 13,590
Costco is a major retailed not just in the US but the world, considered to be the biggest retailer of beef, rotisserie chicken and organic foods in the entire world.
12. IBM (NYSE:IBM)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 14,300
The tech company has operations in at least 170 countries and is responsible for the production of hardware as well as software.
11. JPMorgan Chase (NYSE:JPM)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 24,874
Considered to be one of the most famous banks in the world as well as among the biggest in America, JP Morgan Chase also makes our list of the companies with the most cash reserves in America.
10. GM (NYSE:GM)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 29,038
General Motors ended 2020 strongly, even though the year was not a good one, as few people had a need for cars even as lockdowns were imposed.
9. Oracle (NYSE:ORCL)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 43,057
Oracle is one of the most famous software companies in the world as well as among the most used, making its founder a billionaire and, like most tech companies, has large cash reserves.
8. Berkshire Hathaway (NYSE:BRK.A)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 47,990
In terms of revenue, Berkshire Hathaway is the biggest financial services company in the world, and hence, it isn’t surprising that it has nearly $48 billion in cash reserves as well.
7. Ford Motors (NYSE:F)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 49,961
Even though 2020 was not really a good year for automotive companies, Ford is the second of two automotive companies in our list of the companies with the most cash reserves in America, and has actually ended on a strong note, despite the disruptions of the previous year.
6. Facebook (NYSE:FB)
Total cash, cash equivalents and marketable securities of the company as per the latest quarter (in billions of dollars): 61,954
Facebook is one of the biggest global brands, as well as among the most controversial now, due to the power it wields.
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Disclosure: None. 15 companies with the most cash reserves in America is originally published at Insider Monkey.