Berkshire Hathaway released its Q2 results, but a group of put investors are nervous about Buffett's record-breaking $276.9 billion cash reserve.

According to these people, this means that the stock market may plummet soon because Buffett believes the market has no investment value at its current high valuations.

In fact, according to Semper Augustus' fund manager Chris Bloomstran, who manages about $0.55 billion in assets and holds Berkshire Hathaway as its largest position, that's not the case.

Earlier in an interview, Bloomstran explained that Berkshire Hathaway's huge cash reserve has more "nuance" and does not reflect Buffett's bearish views on the stock market or an imminent market crash.

"Everyone is excited and they've sensationalized it, but it's not that big a deal," Bloomstran said.

Taking Berkshire's cash reserve into consideration,

Bloomstran believes that investors are better off measuring the company's cash reserves by the percentage they represent of Berkshire's total assets, rather than in absolute terms of the company's cash position.

If measured by the company's total assets, Berkshire Hathaway's cash position at the end of the first quarter was 17.5%, which is basically in line with the long-term average level. Bloomstran said that since 1997, Berkshire Hathaway has kept cash on its balance sheet, averaging 13% of its assets.

Another way to look at Berkshire Hathaway's cash position is to compare it with the company's market cap, which paints a similar picture: at the end of the first quarter, Berkshire Hathaway's $189 billion cash was actually at a fairly normal level, far below its peak in 2004 when it was about 40%.

Berkshire Hathaway needs to hold cash.

The fact that Berkshire Hathaway holds more than $200 billion in cash doesn't mean that if they find a large enough target, they can invest all that cash.

"I think about half the cash is reasonably deployed," Bloomstran said.

This is because Berkshire Hathaway's large insurance business requires the company to have adequate cash reserves to provide funds for potential insurance payouts.

Although Buffett has said that Berkshire Hathaway will maintain a permanent cash reserve of about $30 billion to provide funds for potential insurance payouts, Bloomstran has taken a more conservative approach, adding about $50 billion to that reserve level to cover a full year of potential insurance losses.

"So we think $82 billion is more or less Berkshire Hathaway's permanent cash reserve," Bloomstran said in his annual investor letter last month, which means that Berkshire Hathaway has $110 billion left for investments.

Berkshire Hathaway's investment scope is limited.

Due to Berkshire Hathaway's large size, it can only invest in a few companies that will truly drive the conglomerate's development.

Considering that the yield of short-term US Treasury bonds and other cash equivalents is over 5%, Buffett and his company are spending time looking for suitable investments at appropriate prices, which could appear at any time, as was the case when Berkshire first invested in Apple in Q1 2016.

At the time, the S&P 500 index was also at a historic high, and Apple was even the world's largest company, while Berkshire Hathaway's cash reserves were also at a historic high. None of these factors (which exist today) prevented Buffett from making one of Berkshire Hathaway's best investments ever. "He may be limited to investing in the 100 largest companies in the S&P 500 index and a handful of international companies, and he doesn't mind a 5.3% return during a transition period, but that doesn't mean the stock market is about to crash. He's just trying to find excellent companies with stable prices and worth investing in. His investment scope is limited," Bloomstran said.

In summary, investors should not hold a bearish view on the stock market solely because Berkshire Hathaway holds a record cash reserve. At this year's annual shareholder meeting, when asked the question, 'What is Buffett waiting for?', the legendary investor answered,

"We only swing at pitches we like."