Top 20 Companies With the Most Cash Reserves

Published on February 16, 2024 at 3:02 pm by Daniyal Jawaid in Lists, News

In this article, we will list the top 20 companies with the most cash reserves. If you want to skip our detailed discussion about cash hoarding by nonbanking US firms, go to 7 Companies With the Most Cash Reserves.

A recent research by Harvard Business Review revealed that nonbanking US companies have increased their hoards of cash significantly post-pandemic. Traditionally, financial institutions such as banks keep large sums of cash in hand because they are in the business of lending money.

It does not make any apparent sense for nonbanking companies to hoard large piles of cash and collect only interest when cash could be invested for larger profits. According to the latest figures, the total cash reserves of the nonbanking US companies are a whopping $6.9 trillion, nearly equivalent to the GDPs of Germany and India combined. Today, cash represents $1 out of every $5 of total assets held by nonbanking US firms.

As we dig a little deeper, the reasons for keeping cash reserves become clearer. According to analysts, companies are hoarding cash because it helps them avoid premature failures that might decimate shareholder value. It allows them greater investment and operational flexibility. Economies around the world are increasingly becoming knowledge-based. The ‘winner-take-all reward’ model is quite prevalent in industries around the world. So, nonbanking firms are hoarding cash to utilize now-or-never opportunities.

Cash also provides a cushion to bridge the timing mismatch between cash generation and sudden cash needs. In simple terms, it gives the firms the flexibility to quickly capitalize on profitable opportunities. However, there is more to this story.

Maintaining and building flexibility to capitalize on profitable opportunities is one side of the coin when it comes to hoarding cash. Higher cash reserves allow the companies to avoid taxes since they can only be collected on profits made by investments. The premise of investing cash in profitable investments rather than collecting only interest does not factor in the tax rate applied to those profits.

So, it would only make sense for companies to invest rather than hoard cash if the investment is significantly net positive, including tax. Even if the investment is net positive after taxation but without a significant margin, it makes more sense for companies to keep the cash in hand for a small cost and utilize it when a one-of-a-kind opportunity arises. Then, there is also an exception of firms with subjective valuation. These firms might struggle to access capital quickly, and so keep a large proportion of their assets as cash in hand.

It is quite interesting to note that multinationals whose value is generated primarily by their intellectual property are hoarding cash. Research by the professors at Kellogg School of Management found that reserves of Apple, Inc. (NASDAQ:AAPL), Alphabet, Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) accounted for 92% of cash reserves that they could document. Naturally, all of these are tech companies and are also part of our top tech companies list.

All three companies are extensively involved in research and development. In fact, last year Microsoft Corporation (NASDAQ:MSFT) held off increasing the salaries of its employees, citing investment in AI as one of the reasons. It is worth noting that two of these companies, Microsoft Corporation (NASDAQ:MSFT) and Alphabet, Inc. (NASDAQ:GOOG) are in competition with each other for the development of AI models. Microsoft Corporation (NASDAQ:MSFT) has invested heavily in Open AI, whereas Alphabet, Inc. (NASDAQ:GOOG) has invested in Antropic. It is quite apparent that both companies see the AI revolution as one of a kind opportunity that they want to capitalize on.

In 2018, Apple, Inc. (NASDAQ:AAPL) set an ambitious goal to reach a net cash neutral position where any cash in hand is balanced by its total debt. However, last year, the company took drastic steps to decrease the pile of idle cash it was sitting on. Apple, Inc. (NASDAQ:AAPL) returned much of the cash to shareholders in the form of share buybacks and dividends.

It is worth noting here that despite all of the cash hoarding by nonbanking US companies, the financial sector and banking institutions have the most cash. This is apparent in our list as an overwhelming majority are financial institutions.

With that backdrop, let’s look at the top 20 companies with the most cash reserves.

A bank teller in a full-service office, counting and organizing cash.

Methodology

For our list of the top 20 companies with the most cash reserves, we researched online for companies with significant ‘cash on hand’ in their balance sheets. Then, we sorted the companies according to ‘cash on hand’, the higher this figure, the higher the company ranks on our list.

By the way Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional looking for the best stocks to buy you can benefit from the wisdom of hedge funds and corporate insiders.

20 – Barclays PLC (NYSE:BCS)

Cash On Hand – $287.13 B

Headquartered in London, UK, Barclays PLC (NYSE:BCS) is a British multinational investment bank and financial services company. It offers several financial services to consumers, small businesses, and larger financial institutions. The Bank also offers a variety of private banking, advisory, and investment services. It is also committed to innovation, which is evident in its partnership with IBM to explore the potential of generative AI.

19 – MetLife, Inc. (NYSE:MET)

Cash On Hand – $292.39 B

MetLife, Inc. (NYSE:MET) is 19th on our list of the top 20 companies with the most cash reserves. The company provides insurance, annuities, and employee benefit programs. MetLife, Inc. (NYSE:MET) also provides auto and home insurance through its partnership with Farmers Insurance’s GroupSelect Auto Insurance.

18 – China Life Insurance Company Limited (HKG:2628)

Cash On Hand – $307.44 B

China Life Insurance Company Limited is the only overseas wholly-owned subsidiary of China Life Insurance (Group) Company. It has a strong presence in Hong Kong, Macau, and Singapore. The company provides insurance solutions and investment services, which include, group life insurance, individual life insurance, travel insurance, and investment insurance.

17 – HSBC Holdings plc (NYSE:HSBC)

Cash On Hand – $309.50 B

HSBC Holdings plc (NYSE:HSBC) is 17th on our list of the top 20 countries with the most cash reserves. It is a holding company for the HSBC group and provides a variety of international banking and financial services. Some of the services offered by HSBC Holdings plc (NYSE:HSBC) include retail and commercial banking, insurance solutions, and mortgages.

16 – Prudential Financial, Inc. (NYSE:PRU)

Cash On Hand – $317.28 B

Prudential Financial, Inc. (NYSE:PRU) is 16th on our list of the top 20 companies with the most cash reserves. It is one of the leading providers of insurance, retirement planning, and investment management services. Some of the other services that Prudential Financial, Inc. (NYSE:PRU) offers are health insurance, administration, and asset management.

15 – Banco Santander S.A. (BME:SAN)

Cash On Hand – $336.00 B

Banco Santander, S.A., known commercially as Santander, is a multinational Spanish bank with its headquarters in Santander, Cantabria. It offers several financial products and services for individuals. Some of the services that the bank offers include including accounts, cards, loans, mortgages, pension plans, investment funds, and insurance.

14 – Citigroup, Inc. (NYSE:C)

Cash On Hand – $342.02 B

Citigroup, Inc. (NYSE:C) is 14th on our list of the top 20 companies with the most cash reserves. It is an American multinational investment bank and financial services corporation. Citigroup, Inc. (NYSE:C) offers a range of financial services for both, individual and corporate customers. Some of the services that it offers include investment banking, retail brokerage, corporate banking, and cash management products and services.

13 – Axa S.A. (ETR: AXA)

Cash On Hand – $342.53 B

Axa is a France-based holding company that operates as an insurance company. It offers a broad range of products and services, including life and non-life insurance, pension and saving products, and financial and asset management services.

12 – Japan Post Bank Co., Ltd. (TYO:7182)

Cash On Hand – $416.85 B

Japan Post Bank is one of the leading financial institutions in Japan. The bank offers several financial products and services through Japan’s nationwide network of post offices.

11 – Japan Post Holdings Co., Ltd. (TYO:6178)

Cash On Hand – $429.56 B

Japan Post Holding is a publicly traded Japanese conglomerate. It is headquartered in Kasumigaseki, Chiyoda, Tokyo. The company is involved in the postal and logistics business, financial window business, banking business, and life insurance business.

10 – Mizuho Financial Group, Inc. (TYO:8411)

Cash On Hand – $434.40 B

Mizuho Financial Group is 10th on our list of top 20 companies with the most cash reserves. It is a Japanese financial holding company that offers several financial services through its subsidiaries. Some of the financial services that its subsidiaries offer include general banking, securities brokerage, trust banking, and asset management. Mizuho Financial Group is one of the largest financial institutions in the world.

9 – BNP Paribas (EPA:BNP)

Cash On Hand – $507.68 B

Headquartered in Paris, France, BNP Paribas is a multinational universal bank and financial services holding company. It was formed in 2000 as a result of a merger between Banque Nationale de Paris and Paribas. BNP Paribas is one of the largest banking groups in Europe.

8 – Sumitomo Mitsui Financial Group, Inc. (TYO:8316)

Cash On Hand – $517.65 B

Sumitomo Mitsui Financial Group is 8th on our list of the top 20 companies with the most cash reserves. It is a Japanese banking holding company headquartered in the Ōtemachi district of Chiyoda, Tokyo, Japan. The company was formed in December 2002, through a share transfer from Sumitomo.

Click to continue reading and see Top 7 Companies With the Most Cash Reserves.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on December 13, 2024 at by Inan Dogan, PhD

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This is the #1 Gold Stock for your 2025 watch list

Published on December 16, 2024 at by Insider Monkey Staff

Brace yourself.

There’s no question that thanks to Washington’s disastrous policies – and out-of-control spending – the outlook for the U.S. economy now appears dire.

And with the U.S. national debt now rising by a staggering $1 trillion every 100 days…there are no easy solutions to help get the nation back on track.

While Jay Powell and the Biden-Harris White House sweat out a federal debt that has reached $35.5 trillion – and climbing – many investors have raced to the sidelines with their cash.

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Meanwhile, as profitable as gold has been, select gold mining stocks have really kicked into high gear, handing investors even bigger profits.

Click to continue reading…

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