This is no longer the case.
After a year-long drought, Mr. Buffett’s
Berkshire Hathaway Inc.
opens the spending tap again. This reached an $11.6 billion deal buy insurer
, on track to be Berkshire’s biggest acquisition in six years. This bought millions of shares of
And it’s spectacular increased its participation in
growing the energy company from a relatively small stake to one of Berkshire’s top four equity investments.
The big question: Why?
“It’s a gambling parlor,” Mr. Buffett said Saturday of the markets over the past few years. He added that he criticized the financial sector for encouraging investors to adopt risky behavior. While he finds speculative betting “obscene”, the pick-up in market volatility had a positive effect, he said: it allowed Berkshire to find undervalued companies to invest in again after a period of relative calm.
Mr. Buffett, 91, shared his thoughts on the state of the markets, Berkshire’s insurance business and recent investments at the company’s annual meeting of shareholders in downtown Omaha. Saturday marked Mr Buffett’s first time addressing shareholders in person since 2019. The Covid-19 pandemic has forced Berkshire to hold its meetings virtually for the past two years.
Shareholders eager to score prime seats lined up for hours before the doors opened into the arena where Mr. Buffett; the man on the right
98; and vice presidents
70, took the stage. When Mr. Buffett entered, only one member of the public took the opportunity to send a message. “We love you,” the person shouted.
Mr. Buffett seemed equally enthusiastic to see the thousands of shareholders seated before him.
It was much better to be able to be with everyone in person, he said.
Berkshire had enjoyed a period of relative calm before this year. His business flourished; a recovering economy and the turbulent stock market helped push net profit to a record high in 2021. But that didn’t put a lot of cash to work, leading many analysts and investors to question its next moves. . Berkshire ended the year with a near record amount of cash on hand.
Mr Buffett’s sense that there were no attractive investment opportunities for Berkshire quickly gave way to excitement in late February, he said on Saturday, when he obtained a copy of the General Manager of Alleghany.
by Joseph Brandon
The report piqued his curiosity. He decided to follow up with Mr. Brandon, flying to New York to talk about a potential deal over dinner.
If the chief executive hadn’t reached out, “it wouldn’t have occurred to me to write to him and say, ‘Let’s get together,'” Mr Buffett said.
Berkshire’s decision to take a 14% stake in Occidental was also reported. Mr Buffett said he had read an analyst note on the company, whose stock is still trading below its 2011 high, and decided casino-like market conditions made it one good time to buy the stock.
In just two weeks, Berkshire scooped up millions of shares in the company.
“I don’t think we’ve ever had anything like what we have now in terms of the volume of pure gaming activity that’s happening on a daily basis,” Munger said. “It’s not pretty.”
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But the amount of speculation in the markets has given Berkshire a chance to spot undervalued companies, Munger said, allowing the company to tap into its $106 billion cash reserve.
Mr. Buffett and Mr. Munger did not specifically address Berkshire’s decision to increase its stake in Chevron during the morning session of the meeting. It was worth $25.9 billion as of March 31, up from $4.5 billion at the end of 2021, according to the company’s filing. This makes Chevron one of Berkshire’s four largest holdings, alongside
American Express Co. and Bank of America Corp.
Still, Mr. Buffett said he was happy that American companies could produce more oil in the United States. It “keeps the American industrial machine running,” he said.
Berkshire isn’t trying to make its investments based on what it thinks the stock market will do when it opens Monday, Buffett said.
“I can’t predict what the stock is going to do… We don’t know what the economy is going to do,” he said.
Basically, Berkshire is trying to do what it can to continue generating returns for its shareholders, Mr. Buffett said. Berkshire has produced compound annualized gains of 20% between 1965 and 2020 compared to the S&P 500, which has returned 10% including dividends over the same period.
“The idea of permanently losing other people’s money…it’s just a future that I don’t want to have,” Buffett said.
Write to Akane Otani at [email protected]
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