U.S. stocks sell off, tide stock gods spend tens of billions of dollars and enter the market at low prices
NEW YORK (Reuters) – A drop in the stock market is bad news for most investors, but not for Warren Buffett and his team.
Buffett’s Berkshire Hathaway, which is sitting on a near-record cash hoard at the end of 2021, has invested tens of billions of dollars in stocks over the past few months, taking advantage of the current decline in U.S. stocks.
Berkshire was more aggressive during the first-quarter stock market turmoil, with the latest disclosures of new investments in Citigroup, auto loan servicer Ally Financial and media and entertainment company Paramount Global.
Berkshire held about $2.9 billion in Citigroup shares at the end of the first quarter, adding $2.61 billion in Paramount Global Holdings and nearly $390 million in Ally Financial shares, according to regulatory filings.
Buffett’s firm also revealed the addition of drug distribution services firm McKesson, reinsurer Markel and Texas chemical company Celanese, while clearing Wells Fargo, a long-term holding since 1989.
Berkshire increased its holdings of oil company Chevron, Occidental Petroleum, made an M&A arbitrage bet on game developer Activision Blizzard, bought Hewlett-Packard (HP) and continued to increase its holdings of Apple in the first quarter. At present, Apple holds 42.79% of Berkshire’s overall shareholding, which is still the largest holding position. The second and third largest holdings are Bank of America and American Express.
Occidental, which Berkshire began buying in late February, has become one of the company’s top 10 holdings, according to regulatory filings.
The Wall Street Journal pointed out that one of the main points of Berkshire’s latest regulatory filing is that the market turmoil has caused the company to start spending “shopping” on a large scale.
Shanahan, senior equity research analyst at Edward Jones, said energy stocks have two characteristics Buffett has always favored, including low valuations and shareholder compensation in the form of treasury shares and dividends.
Another major focus is Berkshire’s overweight buying of bank stocks, which are also often relatively cheap and offer dividends. The move also represents a reversal of Berkshire’s 2020 sell-off in banking stocks, when it sold Goldman Sachs, JPMorgan Chase and most of Wells Fargo and missed out on the bank’s apparent surge in the second half of 2021.