Business

Warren Buffett spends a lot as the stock market sells

Selling the stock market has been bad news for most investors.

The Omaha company bought 901,768 shares in Occidental Petroleum Corp..

OXY 5.68%

last week, according to a regulatory dossier. The move makes Occidental, in which Berkshire began buying shares in late February, one of its 10 largest holdings.

In recent months, Berkshir has also increased its stake in Chevron Corp..

CLC 3.06%

Activision Blizzard Inc.

ATVI 0.33%

It bought shares of HP Inc..

HPQ 1.98%

Citigroup Inc.

and Ally Financial Inc..

ALLIED – 2.15%

and continued to increase its position in Apple Inc., which remained its largest shareholding.

Meanwhile, he left his position at Wells Fargo & Co..

WFC – 1.01%

first one of its major shares and part of the Berkshire portfolio since 1989.

Investors saw what Berkshir was buying — and even selling — when he filed Form 13F with the Securities and Exchange Commission on Monday. The SEC requires all institutional investors who manage more than $ 100 million to submit a form within 45 days of the end of each quarter. Because institutions need to disclose their holdings on the form, as well as the size and market value of each position, investors often use 13F to measure how large money managers play on the stock market.

One of Berkshire’s files was that the company had incurred an expense due to the market turmoil.

Mr Buffett, who has long been a staunch supporter of value-added investment, has long advised investors that “they should be greedy when others are afraid”. It has been difficult to cultivate this philosophy for the last two years, and the mood of investors in them has been appalling. As the market goes down, Berkshire is in the perfect position to add to its huge stock portfolio, investors say.

“The money is dry powder, and it has a lot,” said Rupal Bhansali, Ariel Investments ’chief global investment investor, Mr. Buffett. Ms. Bhansali manages Ariel’s global mutual fund, which owns Berkshire shares.

Ms Bhansali, among others, believes that Berkshire’s investment in Chevron and Occidental may reflect its commitment to continuing to raise commodity prices for a time.

Energy stocks have been the best group in the S&P 500 this year, with Russia’s invasion of Ukraine benefiting from concerns over disruptions in oil and gas supply lines. Chevron shares are up 47% this year, and Occidental shares are up 134%. In comparison, the S&P fell 16% to 500%.

“It is clear that they are the owners of companies that may have inflation coverage,” Ms Bhansali said.

Energy stocks also offer two characteristics that Mr. Buffett has traditionally taken for granted: low valuations, as well as shareholder returns as well as purchases and dividends, said Jim Shanahan, senior equity research analyst at Edward Jones.

Dividend-paying stocks have surpassed the S&P 500 this year in part because market volatility has led investors to look for stocks that can provide a stable return on money.

“It fits the profile,” Mr. Shanahan said of Berkshire’s Chevron and Occidental stock purchases.

Berkshir also increased its share of bank shares, which also traded at relatively low valuations and offered dividends. The company bought 55 million shares of Citigroup in the first quarter, a stake of about $ 3 trillion. The move is a turning point for Berkshire: in 2020 it unloaded a large stake in the bank, selling it to Goldman Sachs Group Inc..

JPMorgan Chase & Co..

and a large portion of Wells Fargo’s stake, the financial sector lost a significant rally in the second half of the year and 2021.

“There was a lot of criticism for not doing more in March and April 2020,” Mr. Shanahan said of Berkshire. “But they argued that they didn’t know how bad it would be then. It was a different environment. ”

Mr. Shanahan said that although the pandemic marked a missed opportunity for Berkshire, he is pleased to see the company resume its investment activity.

As stock volatility remains high, many investors and analysts expect Mr Buffett, as well as Berkshire portfolio managers Ted Weschler and Todd Combs, to continue putting money on the market in the coming months.

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Berkshire ended last year with a sum of money last year, not necessarily out of a desire to build its own war box, but because it was impossible to find companies that were worth the long-term investment, Mr Buffett said. in an annual letter sent to shareholders in February. As of March 31, it had $ 106.3 billion in cash, less than $ 146.7 billion at the end of 2021.

This year has changed that. With tightening monetary policy, slowing economic growth and ongoing supply chain disruptions putting markets on the brink, Mr. Buffett is at his element, said David Kass, a finance professor at the Robert H. Smith School of Business at the University of Maryland.

“This is what I would consider Warren Buffett’s sweet spot,” Mr. Kass said. “Almost wholesale in the market has allowed Berkshire to buy securities at cheap prices.”

Having money is very popular on Wall Street today. It’s a big change from the behavior of professional asset managers over the last decade. WSJ’s Dion Rabouin explains why money is no longer rubbish. Illustration: Adele Morgan

Write to Akane Otani at akane.otani@wsj.com

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Warren Buffett spends a lot as the stock market sells

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