Buffett invests big chunk of Berkshire Hathaway’s cash

OMAHA: Warren Buffet gave Berkshire Hathaway investors a few details on Saturday about how he spent more than $50 billion earlier this year and again reassured them that the company he built will endure long ater the 91-year-old billionaire is gone.

Tens of thousands of investors packed an Omaha arena Saturday to listen to Buffet and Berkshire’s vice chairmen answer questions at Berkshire’s annual meeting that was back in person for the first time since the pandemic began, but the turnout was likely smaller than when it used to regularly atract more than 40,000.

Berkshire revealed in its earnings report on Saturday morning that its mountain of cash shrank to $106 billion in the first quarter from $147 billion at the beginning of the year as Buffet invested $51 billion in stocks.

Buffet told shareholders on Saturday that right ater he wrote to them in his annual leter on Feb. 26 that he was having trouble finding anything to buy at atractive prices, Berkshire spent more than $40 billion on stocks over the next three weeks, including one day in early March when he spent $4.6 billion at the peak.

Buffet didn’t reveal everything he bought but did mention several highlights, including boosting Berkshire’s stake in oil giant Chevron to $26 billion, up from $4.5 billion at the beginning of the year to make it one of the conglomerate’s four biggest investments. Berkshire also spent billions buying up 14% of Occidental Petroleum’s shares in the first half of March, and added to its already massive investment in Apple stock.

Edward Jones analyst Jim Shanahan said that with the Chevron and Occidental investments combined Berkshire now has more than $40 billion invested in the oil sector.

Even before Saturday, it was clear Buffet was on the hunt because he agreed to buy the Alleghany insurance conglomerate for $11.6 billion and made another multibillion-dollar investment in HP Inc.

Buffet said Saturday that he also bought three German stocks but didn’t name them.

Buffet said Berkshire was able to take advantage of the fact that Wall Street is largely run like a “gambling parlor” with many people speculating wildly on stocks.

“Occasionally, Berkshire gets a chance to do something, and it’s not because we’re smart. It’s because we’re sane.” Buffet said.

Buffet’s investing partner, Charlie Munger, said there is an insane amount of speculation in the stock market over the last couple years as the market soared.

“We have people who know nothing about stocks being advised by stockbrokers who know even less,” Munger said.

Buffet emphasized to shareholders that even with his track record of successful investments, he’s not an expert on timing his investments to the market. Instead he just tries to buy things that are selling for less than they are worth.

Even though Berkshire is led by Buffet and the 98-year-old Munger, investors didn’t ask much about succession planning perhaps because Buffet said a year ago that Vice Chairman Greg Abel, who oversees all of the company’s non-insurance businesses now, will eventually replace him as CEO. Berkshire also has two other investment managers who will take over the company’s porfolio.

Buffet said he thinks Berkshire’s decentralized culture that relies heavily on trusting people to do the right thing and avoiding huge risks will help the company thrive well into the future and many of the companies it owns like BNSF railroad and its major utilities will remain stalwarts of the economy.

“Berkshire is built to forever. There is no finish point,” Buffet said. “The new management - and the management ater them and ater them - are just custodians of a culture that’s embedded.”

Investor Harris Kupperman, who leads the Praetorian Capital hedge fund, said he’s not especially worried about the future of Berkshire ater Buffet because the eclectic conglomerate has a solid foundation.

“He built it as well as he could build it. Nobody is ever going to be him. That’s obvious,” Kupperman said.

He said perhaps Buffet’s eventual successor will be able to reevaluate some long-term Berkshire investments that Buffet has held for decades and decide whether it still makes sense to hang onto things like the company’s huge Coca-cola stake.

But Buffet’s and Munger’s ages are always in the back of Berkshire investors’ minds because there may not be too many more meetings with both of them. Munger sat in a wheelchair during Saturday’s meeting.

“Actuarily, I don’t know how much longer they’ll be able to do this,” said Josu Elejabarrieta, 43, of Miami, who was atending his first meeting.