Buffett invests a large portion of Berkshire Hathaway’s money 2022-04-30 13:43:54


Omaha, neb. Warren Buffett gave Berkshire Hathaway investors some details on Saturday about how he spent more than $50 billion earlier this year, reassuring them once again that the company he created will survive long after the 91-year-old billionaire’s departure.

Tens of thousands of investors thronged the Omaha Arena on Saturday to hear Buffett and Berkshire MPs answer questions at the annual meeting of Berkshire who has returned in person for the first time since the pandemic began, but the turnout will likely be lower than it usually was. Attracts more than 40,000.

Berkshire revealed in its earnings report on Saturday morning that its mountain of liquidity shrank to $106 billion in the first quarter from $147 billion at the start of the year as Buffett invested $51 billion in stocks.

Buffett told shareholders on Saturday that right after writing to them in his annual February 26 letter that he was having trouble finding anything to buy at attractive prices, Berkshire spent more than $40 billion on stocks over the next three weeks, including one day in early March when he spent $4.6 billion at the peak.

Buffett did not reveal everything he bought, but he did mention several highlights, including increasing Berkshire’s stake in oil giant Chevron to $26 billion, up from $4.5 billion at the start of the year to make it one of the conglomerate’s four largest investments. Berkshire also spent billions buying up over 14% of Occidental Petroleum in the first half of March, adding to its already massive investment in Apple stock.

With Chevron and Occidental’s combined investments, Berkshire now has more than $40 billion invested in the oil sector, said Edward Jones analyst Jim Shanahan.

Even before Saturday, it was clear that Buffett was on the lookout as he agreed to buy Ghanaian insurance conglomerate for $11.6 billion and made another multibillion-dollar investment in HP Inc. On Saturday, Buffett said he had also bought three German shares but did not name them with them.

Buffett said Berkshire has been able to capitalize on the fact that Wall Street is largely run like a “gaming hall” where many people speculate heavily on the stock.

“Every once in a while, Berkshire gets a chance to do something, and it’s not because we’re smart. It’s because we’re sane.” Buffett said.

“We have people who know nothing about stocks that are recommended by stockbrokers who know even less,” Munger said.

Buffett assured shareholders that even with his track record of successful investments, he is not an expert in the timing of his investments in the market. Instead, he is only trying to buy things that are selling for less than they are worth.

Buffett revealed Saturday that he’s made a big bet on Microsoft’s planned acquisition of Activision Blizzard. Two months after another Berkshire investment manager bought nearly 15 million Activision shares, he said, he increased that stake to roughly 9.5% of the company — or about 74 million shares — after Microsoft announced the deal in January because Activision shares It was selling for less than $95 per share of the transaction price.

Although Berkshire is led by Buffett and 98-year-old Munger, investors haven’t asked much about succession planning, perhaps because Buffett said a year ago that Vice Chairman Greg Appel, who oversees all of the company’s non-insurance business now, would eventually replace him as chairman. executive. Berkshire also has two other investment managers who will handle the company’s portfolio.

Buffett said he believes that Berkshire’s decentralized culture that relies heavily on trusting people to do the right thing and avoid huge risks will help the company thrive well into the future and many of the companies it owns like BNSF Rail and its key facilities will remain some of the strongest in the world. Economie.

“Berkshire is built forever. There is no end point,” Buffett said. “The new management — and management after them and after them — are just custodians of an ingrained culture.”

Investor Harris Cooperman, who leads the hedge fund at Pretoria Capital, said he is not particularly concerned about Berkshire’s future after Buffett because the selective conglomerate has a solid foundation.

“He built it as far as he could possibly build it. Nobody will ever be him,” Cooperman said.

He said Buffett’s eventual successor might be able to re-evaluate some of the long-term Berkshire investments that Buffett has held for decades and determine whether it makes sense to stick with things like the company’s massive stake in Coca-Cola.

But Omari Buffett and Munger are always on the back of the minds of Berkshire investors because there may not be many meetings with both. Munger sat in a wheelchair during Saturday’s meeting.

“Actually, I don’t know how well they’ll be able to do that,” said Jose Eligabareta, 43, of Miami, who was attending his first meeting.

Many of the questions Buffett and Munger received on Saturday covered topics that had been asked of them before and stuck largely to the kind of public life lessons and advice that have become the hallmark of the shareholder meeting in recent years.

In response to concerns about the current high inflation, Buffett told investors that the best thing they could do was invest in themselves so that someone would always want to pay them for their services no matter what the dollar was worth.

Buffett was not asked directly about the war in Ukraine, but he did tell investors that he remains concerned about the risks posed by nuclear weapons to the world. But Buffett said he had no solution to the problem.

“It’s a very, very dangerous world,” he said.

Earlier on Saturday, Berkshire said its first-quarter profit fell more than 53% on the back of a large swing in the paper value of its investments. Berkshire said it earned $5.46 billion, or $3,702 per Class A share, during the quarter. That’s down from $11.7 billion, or $7.638 per Class A share, a year ago.

Buffett says Berkshire’s operating profit is a better measure of a company’s performance because it excludes investment gains and losses. By that measure, Berkshire’s earnings were flat at $7.04 billion, or $4,773.84 per Class A share, up from $7.018 billion, or $4,577.10 per Class A share, a year earlier.

The four analysts surveyed by FactSet expected Berkshire to report operating profit of $4,277.66 per Class A share.

In addition to investments, Berkshire Hathaway owns more than 90 companies, including BNSF Railroad, several major utilities, Geico insurance, and a variety of manufacturing and retail businesses.

Janet Dalton of Overland Park, Kansas, said she’s been attending the meetings for decades. Her family has a longer association with the company because her father bought shares in textile company Berkshire Hathaway even before Buffett took it over in 1965 and began turning it into the conglomerate it is today. They never sold the stock, which now sells for nearly $500,000 apiece.

Dalton said she misses the more detailed working answers that Buffett used to give in previous meetings she attended.

“When I first attended meetings, it was like getting a micro-MBA. Now it’s more general,” Dalton said. But part of what makes her come back year after year is the chance to reconnect with friends and fellow investors she met in previous meetings.