Warren Buffett’s Berkshire Hathaway bet big on the U.S. stock market in the first quarter, buying $ 51.1 billion worth of shares as it let the sprawling conglomerate’s heap of money work as financial markets fell from record highs.
This is a dramatic change from an investor who has been a stock seller for the past two years, warning of high ratings and little market share, which would generate significant returns.
But global financial markets have weakened in recent months after Russia invaded Ukraine and fears of a slowdown in China’s economy shook investor confidence.
This offered him a more attractive entry, according to analysts and investors, who were warmed by a vote of confidence in the stock market by the so-called Oracle of Omaha.
The frantic pace of stock purchases was enough to make a dent in Berkshire’s pile of money, which Buffett often likened to a military chest. His cash fell to $ 106.3 billion at the end of March from just under $ 147 billion at the end of the year. The company’s first-quarter report shows it sold $ 9.7 billion worth of shares during the period, indicating that it was a net buyer of $ 41 billion in shares earlier this year – one of its busiest quarters in recent memory.
The report shows that Berkshire has sharply increased its ownership of energy company Chevron, citing its $ 25.9 billion stake as one of its five largest stocks in a $ 390 billion stock portfolio. The investment in Chevron accompanies the purchase of billions of dollars worth of shares in the oil company Occidental and the manufacturer of printers and computers HP this year.
To fund these investments, as well as $ 3.2 billion spent in the quarter on share repurchases, Berkshire sold or left Treasuries and other securities worth more than $ 44 billion to fall in the quarter.
Buffett has improved his dealings in recent months after sitting on the sidelines for much of the pandemic era. In March, he struck a $ 11.6 billion deal to take over insurance toy maker Alleghany.
The figures were released on Saturday when tens of thousands of Berkshire shareholders flocked to Omaha to hear the billionaire investor at the company’s annual meeting, the first to be held in person since 2019.
Berkshire reported a net profit of $ 5.5 billion in the first three months of 2022, less than half of the level generated a year earlier. The company’s results include a $ 1.6 billion shock from losses on the investment and derivatives portfolio.
With the exception of those fluctuations, which Buffett criticized as “usually meaningless” because U.S. accounting rules require changes in the value of its investment portfolio to be included in quarterly results, the company reported operating profits of $ 7.04 billion. That was a little over the profit a year ago.
The results showed that the company’s railway, utility and manufacturing companies reported higher quarter-on-quarter profits than a year earlier.
Revenue from the BNSF, which Buffett described in a letter to shareholders in February as one of the conglomerate’s four giants, rose 11 percent to $ 5.8 billion. The company warned that the supply chain disruption, including lower car deliveries due to chip shortages, weighed heavily on supply volumes.
“In addition, the development of geopolitical conflicts in 2022 has contributed to the disruption of supply chains, which has led to increased costs for goods, goods and services in many parts of the world,” he added.
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Its unit, which produces modular homes, Clayton Homes, has seen a 21% increase in sales. While saying demand has remained strong, he warned that rising mortgage costs “are likely to slow the demand for new housing, which could adversely affect our business.”
Profits at his insurance companies – including Geico – were almost wiped out, falling to just $ 47 million from $ 764 million a year earlier. The Geico division reported a loss of takeover during the period, blaming rising insurance claims and higher payment costs for these benefits.
Shares of Berkshire outpaced the US stock market this year, rising 7.5% from a 13% decline in the benchmark S&P 500.
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