Buffett tells shareholders about spending over $50 billion
OMAHA, NEB. >> Warren Buffett gave Berkshire Hathaway investors a few details Saturday about how he spent more than $50 billion earlier this year and again reassured them that the company he built will endure long after the 91-yearold billionaire is gone.
Tens of thousands of investors packed an Omaha arena Saturday to listen to
Buffett 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 attract more than 40,000.
Berkshire revealed in its earnings report 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 Buffett invested $51 billion in stocks and repurchased $3.2 billion of its own shares.
Buffett told shareholders that right after he told them in his annual letter on Feb. 26 that he was having trouble finding anything to buy at attractive prices, Berkshire spent more than $40 billion on stocks over the next three weeks.
Buffett 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 Buffett 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. Buffett said Saturday that he also bought three German stocks but didn't name them.
Buffett 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.” Buffett said.
Buffett revealed Saturday that he has made a big bet on Microsoft's planned acquisition of Activision Blizzard. He said a couple months after one of Berkshire's other investment managers bought roughly 15 million Activision shares, he increased that
stake to roughly 9.5% of the company — or about 74 million shares — after Microsoft announced the deal in January because Activision stock was selling for less than the $95 per share deal price.
Both Buffett and his investing partner, Charlie Munger, reiterated their past criticisms of cryptocurrencies like bitcoin because they don't produce anything. Munger said cryptocurrencies are “stupid because they're likely to go to zero” and “evil because they undermine the Federal Reserve.” Plus he said they make American leaders seem foolish for not banning them like China did.
Even though Berkshire is led by Buffett and the 98-year-old Munger, investors didn't ask much about succession planning perhaps because Buffett 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 portfolio.
Buffett 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,” Buffett said. “The new management — and the management after them and after 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 Berkshire's future because the eclectic conglomerate has a solid foundation.