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Berkshire Hathaway: Buffett invests large amounts of cash

OMAHA, Neb. –

On Saturday, Warren Buffett gave Berkshire Hathaway investors a few details about how he spent more than $50 billion earlier this year, and reassured them once again that the company he built will last. long after the 91-year-old billionaire passed away.

Tens of thousands of investors gathered at the Omaha arena on Saturday to listen to Buffett and Berkshire’s vice presidents answer questions at Berkshire’s annual meeting, returning in person for the first time since. The pandemic has begun, but turnout may be less than usual. attracted more than 40,000.

Berkshire revealed in earnings reports Saturday morning that its cash mountain fell to $106 billion in the first quarter from $147 billion at the start of the year when Buffett invested $51 billion in stocks.

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

Buffett did not disclose everything he had purchased but did mention some highlights, including increasing Berkshire’s stake in oil giant Chevron to $26 billion, up from $4.5 billion in beginning of the year to make it one of the group’s four biggest investments. Berkshire also spent billions of dollars buying a 14% stake in Occidental Petroleum in the first half of March and adding to its already massive investment in Apple stock.

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

Even before Saturday, it was clear Buffett was being hunted because he agreed to buy the insurance group Alleghany for $11.6 billion and make another billion-dollar investment in HP Inc. Buffett said Saturday that he also bought three German shares, but did not name them. surname.

Buffett said Berkshire was able to take advantage of the fact that Wall Street was largely run like a “gambling room” with many people speculating wildly in stocks.

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

Buffett’s investment partner, Charlie Munger, said there’s been a lot of crazy speculation in the stock market over the past few years as the market has skyrocketed.

“We have people who know nothing about stocks who are advised by stockbrokers who know even less,” says Munger.

Buffett emphasizes to shareholders that even with a successful investment track record, he is no expert on when to put his investments to market. Instead, he just tries to buy things that sell for less than they’re worth.

Buffett revealed on Saturday that he had bet big on Microsoft’s plan to buy Activision Blizzard. A few months after one of Berkshire’s other investment executives bought about 15 million shares of Activision, he said, he increased that stake to about 9.5 percent of the company — or about 74 million shares, he said. — after Microsoft announced the deal in January because Activision stock sold for less than $95 per share.

Although Berkshire is led by Buffett and 98-year-old Munger, investors aren’t asking much about the succession plan, perhaps because Buffett said a year ago that Vice Chairman Greg Abel, who oversees all of the business’ operations. the company’s current non-insurance business, will eventually replace him as CEO. Berkshire also has two other chief investment officers who will take over the company’s portfolio.

Buffett said he thinks Berkshire’s decentralized culture is largely based on trusting people to do the right thing and avoid big risks that will help the company thrive in the future and the many companies it owns like sugar. BNSF iron and its major utilities will remain the mainstay of the economy.

Buffett said: “Berkshire was built to last forever. There’s no end to it.” “The new management – and the management after them and after them – are just custodians of the culture that’s already embedded in.”

Investor Harris Kupperman, head of hedge fund Praetorian Capital, said he’s not particularly worried about Berkshire’s future after Buffett because the eclectic conglomerate has a solid foundation.

“He built it as well as he could build it. No one will be him. That’s obvious,” Kupperman said.

Perhaps Buffett’s eventual successor will be able to re-evaluate some of the long-term investments in Berkshire that Buffett has held for decades, he said, and decide if it still makes sense to continue holding, he said. things like Coca-Cola giant shares of the company or not.

But the ages of Buffett and Munger are always on the minds of Berkshire investors as there may not be too many encounters left with both. Munger was in a wheelchair during Saturday’s meeting.

“Really, I don’t know how much longer they’ll be able to do this,” said Josu Elejabarrieta, 43, of Miami, who was attending his first meeting.

Many of the questions Buffett and Munger received on Saturday were on topics they’ve been asked before, and they mostly stuck to the general life lessons and advice that have become the hallmarks of shareholder meetings. In recent years.

In the face of current high inflation concerns, Buffett tells investors that the best thing they can do is invest in themselves so that someone will always want to pay them for their services no matter what. How much is a dollar worth?

Buffett was not asked directly about the war in Ukraine, but he told investors he remains concerned about the risks nuclear weapons pose to the world. But Buffett said he doesn’t have any solution to the problem.

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

Earlier on Saturday, Berkshire said its first-quarter earnings fell more than 53% as the paper value of its investments changed dramatically. Berkshire said it earned $5.46 billion, or $3,702 per Class A share, for the quarter. This is down from $11.7 billion, or $7,638 per Class A share, a year ago.

Buffett says that Berkshire’s operating income is a better measure of a company’s performance because they exclude investment gains and losses. By that measure, Berkshire’s earnings remained steady 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. Ah, a year ago.

Four analysts surveyed by FactSet expect Berkshire to report operating income of $4,277.66 per Class A share.

In addition to investments, Berkshire Hathaway owns more than 90 businesses as a whole, including the BNSF railroad, several major utility companies, Geico insurance, and a range of manufacturing and retail companies.

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

Dalton said she remembers more detailed business answers Buffett had given in previous meetings she attended.

“When I first went to the meetings, it was like getting a mini MBA. Now it’s become more general,” says Dalton. But part of what keeps her coming back year after year is the opportunity to reconnect with friends and fellow investors she’s met in previous meetings.

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