Not for Warren Buffett and his team.
Mr Buffett’s Berkshire Hathaway Inc. has used the downturn as an opportunity to increase spending on the stock, deploying tens of billions of dollars over the past few months after ending 2021, which has a near-record cash pile.
The Omaha-based company bought 901,768 shares of Occidental Petroleum Corp last week, according to a regulatory filing. The move is likely to become an accidental one in which Berkshire began buying shares in late February, one of its 10 largest holdings.
In the past few months, Berkshire has also increased its stake in Chevron Corp., placed a merger-arbitrage bet on Activision Blizzard Inc., bought an 11% stake in HP Inc. and continues to add to its position in Apple Inc. Largest stockholding.
Investors will get to see what else Berkshire is buying — as well as what it’s selling — when it files a report known as Form 13F with the Securities and Exchange Commission on Monday. The SEC requires all institutional investors who manage more than $100 million to file forms within 45 days of the end of each quarter. Because institutions must disclose the size and market value of each position along with their equity holdings on the form, investors often use the 13F to gauge how big money managers are playing in the stock market.
The one takeaway from Berkshire’s filing is likely to be this: Market turmoil has allowed the company to go on a spending spree.
Buffett, a longtime practitioner of value investing, has long advised investors to “be greedy when others are intimidated.” That philosophy had been difficult to put into practice over the past two years, during which investors’ mood seemed anything but largely fearful. Now that the market is falling, Berkshire is in a prime position to add to its vast stock portfolio, investors say.
“Cash is dry powder, and he has a lot of it,” said Rupal Bhansali, chief investment officer for global equities at Mr. Buffett’s Ariel Investments. Ms. Bhansali manages Ariel’s Global Mutual Fund, which holds shares in Berkshire.
Ms. Bhansali, among others, also believes that Berkshire’s investments in Chevron and Occidental may reflect the condition that commodity prices remain elevated for some time.
Energy stocks have been the best-performing group in the S&P 500 this year, benefiting from a boom in commodities prices that began after Russia’s invasion of Ukraine, amid concerns about disruptions in oil and gas supply lines. Expressed. Shares of Chevron are up 43 percent this year, while Occidental shares are up 121%. In comparison, the S&P 500 is down 16%.
“They clearly own companies that can hedge against inflation,” Ms. Bhansali said.
Jim Shanahan, senior equity research analyst at Edwards Jones, said energy stocks also offer two characteristics that Mr. Buffett has traditionally attracted: low valuations, as well as returns in the form of shareholder buybacks and dividends.
Dividend-paying stocks have outperformed the S&P 500 this year, as investors look for stocks that can deliver steady cash returns because of market volatility.
“It fits the profile,” Shanahan said of Berkshire’s Chevron and Occidental share purchases.
With stock volatility high, many investors and analysts expect Mr. Buffett, as well as Berkshire portfolio managers Ted Weschler and Todd Combs, to continue putting cash to work in the market in the months ahead.
Berkshire ended last year with a mountain of cash on its hands – not necessarily out of a desire to build up its war chest, but because it was impossible to find companies worth investing in for the long term, Mr Buffett said in February. shareholders in their annual letter. It had $106.3 billion in cash as of March 31, down from $146.7 billion at the end of 2021.
This year has changed that. Buffett is in his element, said University of Maryland’s Robert H. said David Kaas, a finance professor at the Smith School of Business.
Mr. Kaas said, “That’s what I consider to be Warren Buffett’s favorite spot. The near-wholesale in the market has provided Berkshire an opportunity to buy securities at bargain prices.”