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Buffett invests large portions of Berkshire Hathaway’s cash

OMAHA, Neb. (AP) – Warren Buffett gave Berkshire Hathaway investors some details on Saturday about how he spent more than $ 50 billion earlier this year, reassuring them that the company he built will last long after the 91-year-old billionaire disappears.

Tens of thousands of investors packed an Omaha arena Saturday to listen to Buffett and Berkshire’s deputies answer questions at Berkshire’s annual meeting who was back in person for the first time since the pandemic began, but turnout was probably lower than when it used to attract more than 40,000 regulars.

Berkshire revealed in its earnings report Saturday morning that the mountain of cash shrank to $ 106 billion in the first quarter from $ 147 billion at the beginning of the year when Buffett invested $ 51 billion in equities.

Buffett told shareholders on Saturday that right after he wrote to them in his annual letter on February 26 that he was having trouble finding something to buy at attractive prices, Berkshire spent more than $ 40 billion on shares over the next three weeks.

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

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

Even before Saturday, it was clear that Buffett was on the hunt because he agreed to buy Alleghany $ 11.6 billion insurance conglomerate and made another multi-billion dollar investment in HP Inc. Buffett said on Saturday that he also bought three German shares, but did not mention them.

Buffett said Berkshire was able to take advantage of the fact that Wall Street is largely run as a “gambling lounge” with many speculating wildly on stocks.

“Sometimes Berkshire gets a chance to do something, and it’s not because we’re smart. That’s because we’re sane. ” in Buffett.

Buffett revealed on Saturday that he has invested heavily in Microsoft’s planned acquisition of Activision Blizzard. He said that a few months after one of Berkshire’s other investment managers bought about 15 million Activision shares, he increased his stake to about 9.5% of the company – or about 74 million shares – after Microsoft announced the deal in January because the Activision share was sold for less than $ 95 a share.

Both Buffett and his investment partner, Charlie Munger, reiterated their previous criticism of cryptocurrencies such as bitcoin because they do not produce anything. Munger said cryptocurrencies are “stupid because they are likely to go to zero” and “evil because they undermine the Federal Reserve.”

Although Berkshire is led by Buffett and the 98-year-old Munger, investors did not ask much about succession planning, perhaps because Buffett said a year ago that Vice President Greg Abel, who now oversees all of the company’s non-insurance businesses, will eventually replace him as CEO. Berkshire also has two other investment managers who will take over the company’s portfolio.

Buffett said he believes Berkshire’s decentralized culture, which is largely dependent on trusting people to do the right thing and avoiding major risks, will help the company thrive in the future, and many of the companies it owns as BNSF railroad and its great tools will remain faithful to finances.

“Berkshire is built forever. There is no end in sight,” Buffett said. “The new leadership – and the leadership after them and after them – are just guardians of a built-in culture.”

Investor Harris Kupperman, who heads the Praetorian Capital hedge fund, said he is not particularly worried about Berkshire’s future because the eclectic conglomerate has a solid foundation.

“He built it as best he could build it. No one will ever be him. It is obvious, “said Kupperman.

He said that perhaps Buffett’s possible successor would be able to reconsider some long-term Berkshire investments that Buffett has had for decades and determine whether it still makes sense to hang on to things like the company’s huge Coca-Cola stake.

But the age of Buffett and Munger is always in the minds of Berkshire investors because there may not be too many more meetings with them both. Munger sat in a wheelchair during Saturday’s meeting.

“I really do not know how much longer they will be able to do this,” said Josu Elejabarrieta, 43, of Miami, who attended his first meeting.

In response to concerns about the current high inflation, Buffett told investors that the best thing they could do is invest in themselves so that someone will always pay them for their services no matter how much a dollar is worth. He said all Berkshire companies were paying extraordinarily higher prices for commodities and products, but inflation should have been expected after all the money the government sent out during the pandemic.

“We have had a lot of inflation, and it would be almost impossible not to have it with all the money we sent out,” he said.

Earlier Saturday, Berkshire said first-quarter earnings fell more than 53% due to a large fluctuation in the paper value of investments. Berkshire said it earned $ 5.46 billion, or $ 3.702 per Class A share, during the quarter. That is down from $ 11.7 billion, or $ 7.638 per Class A share, a year ago.

Buffett says Berkshire’s operating revenues are a better measure of the company’s performance because they exclude investment gains and losses. By this target, Berkshire’s earnings remained stable at $ 7.04 billion, or $ 4,773.84 per Class A share, up from $ 7.018 billion, or $ 577.10 per Class A share, a year ago.

The four analysts surveyed by FactSet expected Berkshire to report an operating profit of $ 4277.66 per Class A share.

In addition to investments, Berkshire Hathaway owns more than 90 businesses directly, including BNSF Railways, several major utilities, Geico Insurance and a range of manufacturing and retail companies.

Janet Dalton from Overland Park, Kansas, said she has attended the meetings for decades. Her family has an even longer connection to the company because her father bought shares in the textile company Berkshire Hathaway even before Buffett took it over in 1965 and began to convert it into the conglomerate it is today. They never sold the shares, which are now being sold for almost $ 500,000 apiece.

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

“When I first came to the meetings, it was like getting a mini-MBA. Now it has become more general, said Dalton. But one of the things that makes her come back year after year is the chance to resume contact with friends and co-investors she has met at previous meetings.

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