After years of complaining that high valuations were thwarting their stock-buying efforts, Warren Buffett’s Berkshire Hathaway Inc. is withdrawing shares of other companies.
The group made nearly $41 billion in net purchases in the first quarter, including boosting a stake in Chevron Corp, which vaulted investments in Berkshire’s top four common stock holdings. Buffett also revealed that the company now has Activision Blizzard Inc. Expanded 9.5% stake in stock – Microsoft Corp.
In figures going back to 2008, has Berkshire not been so significant as a net buyer of common shares in any quarter. Buffett’s A flurry of activity in recent months fueled a number of questions from shareholders at its first individual annual meeting since 2019 on Saturday.
The gathering, held in Buffett’s hometown of Omaha, Nebraska, lasted for hours as CEO and his business partner Charlie Munger raised questions about markets, nuclear weapons, and even bitcoin. They were joined on stage by two prominent deputy, Greg Abel and Ajit Jain, who answered questions about railroads, cyber attacks and auto insurance companies. Last year, Abel was officially confirmed as the successor to Buffett to take over as CEO of Berkshire after he decided to step down.
But Saturday’s event was still dominated by Buffett, 91, and Munger, 98, who both gave no indication that they were planning to step back from their roles anytime soon. Both executives have reduced other duties slightly in recent years, with Buffett announcing that this year’s charity lunch auction would be his last after more than two decades, and Munger relinquishing his presidency at Daily Journal Corp. .
Due to stiff competition from private equity firms as well as buyers, including high valuations, Buffett and his deputies have struggled in recent years to find ways to work Berkshire’s cash into high-returning assets. But Berkshire executives got back into action during the first three months of the year, adding more Occidental Petroleum Corp. shares and striking a deal to buy Allegheny Corp. for $11.6 billion in cash, which is expected to close in the fourth quarter. was expected. This is in addition to the new ramped-up Chevron and Activision stakes.
“We have so much trouble finding new ideas that we find it hard to ignore anyone,” Buffett said at the meeting in Omaha, Nebraska. Any deal by the group “must be bigger now,” he said.
Berkshire’s giant common equity holding in Occidental was one of its biggest disclosed purchases in the first quarter, and came on top of the $10 billion Berkshire had already invested in the oil-producing years. Buffett noted that the investments came together quickly after spending the weekend reading a presentation by Chief Executive Officer Vicki Holb.
“What Vicki Holb was saying was nothing but understanding, and I decided this was a good place to put Berkshire’s money,” Buffett said. And two weeks later we had 14% of the company.
Berkshire’s substantial investment in Chevron during the quarter, along with its $10 billion investment in Occidental’s preferred shares, is a $40 billion bet on the oil sector, said Jim Shanahan, an analyst at Edwards Jones.
cash pile
The purchase helped shore up Berkshire’s cash pile, which ended the first quarter at $106 billion, its lowest since the third quarter of 2018. The hoard was running almost at record levels in recent quarters.
As Berkshire revived its stock-buying engine, the company slowed its roll on share repurchases during the quarter, with only $3.2 billion of stock buybacks, the lowest since the same period in 2020 and the last three months. down from $6.9 billion repurchased during the 2021. Buffett increasingly leaned on buybacks as a way to put money to work in a competitive bargaining environment. Berkshire’s Class A shares were more expensive during the period, rising more than 17% during the first quarter.
The group posted a profit of just 0.3% to $7.04 billion in the first quarter compared to the same period a year ago. While manufacturers and retailers were strong during the period, underwriting at insurance companies was soft in the quarter.