At the 2022 Berkshire Hathaway annual meeting hosted in Warren Buffett’s hometown of Omaha, Nebraska, the Chairman, CEO, and legendary investor offered headline-worthy pearls of wisdom upon headline-worthy pearls of wisdom.
Fielding questions alongside right-hand man Charlie Munger, deputy slash heir to Berkshire Hathaway’s throne Greg Abel, and Abel’s fellow deputy Ajit Jain, it was – as Hemingway himself would have described it – a moveable feast that those in attendance will likely remember for years to come. The most notable reveal, however, involved disclosing some of what the renowned conglomerate spent US$41 billion / AU$58 billion on during Q1. Despite Buffett’s running complaints about ridiculous valuations torpedoing his best efforts to find worthwhile buys.
As it so happens, The Oracle of Omaha is rather keen on Chevron, upping Berkshire Hathaway’s existing stake from US$4.5 billion / AU$6.39 billion to US$26 billion / AU$37 billion, effectively making NYSE: CVX one of its Top 4 common stock holdings. Buffett also revealed Berkshire Hathaway currently holds an increased 9.5% stake in Activision Blizzard (74 million shares at less than US$95/ AU$135 a pop) – “an arbitrage bet on the video-game maker in the midst of being acquired by Microsoft,” according to Katherin Chiglinsky of Bloomberg.
“Berkshire has not been this significant of a net buyer of common stocks in any quarter in data going back to 2008. Mr Buffett’s flurry of activity in recent months fuelled a number of questions from shareholders on Saturday at its first in-person annual meeting since 2019,” explains Chiglinsky.
“Mr Buffett and his deputies have struggled in recent years to find ways to put Berkshire’s cash to work in higher-returning assets, due in part to stiff competition from buyers including private equity firms as well as high valuations.”
“But the Berkshire executives were back in action during the first three months of the year, adding more Occidental Petroleum Corp shares and striking an agreement to buy Alleghany for US$11.6 billion / AU$16.5 billion in cash in a deal expected to close in the fourth quarter. That is in addition to the newly ramped-up Chevron and Activision bets.”
“Berkshire’s massive common equity holding in Occidental was one of its biggest disclosed purchases in the first quarter and came on top of the US$10 billion / AU$14.2 billion Berkshire had already invested in the oil producer years back.”
The cherry on top? Buffett also actioned a US$3.2 billion / AU$4.5 billion re-purchase of Berkshire Hathaway shares.
As expected from the grandaddy of value investing, you still won’t catch him parting ways with a single red dime for your run-of-the-mill meme stocks or any form of cryptocurrency. Nor should we hold our breath for Abel & Co. to dip their toes in after Buffett (91) and Munger (98) are long gone.
“Sometimes the stock market is quite investment-oriented, and other times, it’s almost totally a casino, a gambling parlour — and that existed to an extraordinary degree in the last couple of years, encouraged by Wall Street,” says Warren Buffett before noting how Wall Street cashes in by “catching the crumbs that fall off the table of capitalism” and doubling down on his long-held stance when it comes to crypto.
“If you told me you owned all of the Bitcoin in the world, and you offered it to me for $25, I wouldn’t take it. Because what would I do with it? I would have to sell it back to you one way or another. It isn’t going to do anything.”
“Berkshire is built to forever. There is no finish point. The new management – and the management after them and after them – are just custodians of a culture that’s embedded.”
That being said, he isn’t as out of touch as you’d think about the power of YOLO-ing en masse into the likes of Gamestop or AMC in defiance of institutions.
“Take away the management fees and I’d bet on the monkeys [read: apes].”
“We’ve got people who know nothing about stocks being advised by stockbrokers who know even less,” adds Charlie Munger.
The purchases outlined by Warren Buffett at the 2022 Berkshire Hathaway annual meeting have reduced the conglomerate’s cash pile from US$147 billion / AU$208.6 billion at the beginning of the year to just US$106 billion / AU$150.4 billion as of Q1’s conclusion – the lowest since Q3 of 2018.