Over the past two years, Warren Buffett seemed to have lost his appetite for the stock market. The first quarter of 2022 drastically reverses the trend. Berkshire Hathaway, the Oracle of Omaha conglomerate, is back on the scene with the purchase of more than $ 51 billion in shares in the first quarter of 2022.
The operations range from the insurance sector to that of gaming, up to robust growth in exposure to the oil industry. Buffett, speaking in Omaha for the annual shareholders’ meeting, described the markets as an “arcade” and reiterated his hostility to more speculative investments (“They are obscene”). At the same time, he said, the volatility on the lists allowed him to find undervalued businesses and get back on the road with large operations, drawing on a cash that was close to 150 billion dollars at the end of 2021.
From HP to Chevron, the acquisition boom of the “Oracle”
The list of transactions concluded in the first quarter includes a deal from $ 11.6 billion to get hold of the Alleghany insurance group and hefty buy-outs of shares in the oil group Occidental Petroleum (Berkshire now holds 14% of the company, worth more than $ 7 billion) and computer giant HP: Buffett, once hostile to the tech sector, has increased the 11% stake in the group, for a value of 4.4 billion as of May 1, 2022.
Always energy and tech are the background to two other maxi-operations in the first months of the year. On the first front, Berkshire massively increased its equity stake in the oil giant Chevron, from a stake of $ 4.5 billion at the end of 2021 to $ 25.9 billion at the end of March 2021. Today, the value has soared to over 27 billion dollars, for a share that affects 7.7% of the group’s portfolio and makes Chevron one of the top four holdings of the holding together with Apple (143 billion, equal to 40.5% of the group’s portfolio), Bank of America (36.8 billion, 10.4%) and American Express (26.4 billion, 7.5%). On the second, that of tech, Buffett got his hands on millions of shares of Activision Blizzard, a video game company in Microsoft’s crosshairs. Berkshire’s interest in Activision began before the Redmond giant initiated its acquisition. Now Buffett controls a 9.5% stake, for a value of over 5 billion, which makes him the company’s largest shareholder.
Berkshire Hathaway closed 2021 with soaring profits and record cash of $ 147.6 billion, now down to “only” $ 106.2 billion after the acquisition fever of the first months of the year. The good results of the group and the solidity of its reserves cash until a few months ago, they had measured themselves against the void of operations and announcements of weight on the side of acquisitions. According to the Wall Street Journal, Buffett’s enthusiasm would have awakened with the reading of two reports that led him to invest first in Alleghany and then in Occidental Petroleum. In the case of the oil company, Buffett was persuaded to buy millions of shares after learning from an analyst’s note that the group’s stock was hovering lower than its highs in 2011.
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