Buffett stock buys have fans buzzing

As war broke out in Europe and U.S. inflation soared, Berkshire Hathaway Inc.'s Warren Buffett was doubling down on a tried-and-trusted strategy to navigate the fallout.

The billionaire investor went on his biggest stock-buying spree in at least a decade, undeterred by the geopolitical turmoil and fears of runaway inflation. He and his deputies dug deeper into the U.S. stock market and expanded the conglomerate's stakes in Chevron Corp. and Activision Blizzard Inc., even as Buffett acknowledged the “extraordinary” price increases in Berkshire's businesses.

Buffett, who held court in Omaha, Neb., on Saturday at Berkshire's annual shareholder meeting, had faced questions about why he didn't take advantage of the downturn when the pandemic took hold. Now, as war and inflation fuel market volatility, prompting the S&P 500's worst quarter in two years, he's ramped up amid the uncertainty, making US$41 billion in net stock purchases in the first quarter. That's the most in data going back to 2008.

“As long as Buffett and his team are paying reasonable prices for quality companies, these investments should do well in any environment — inflationary or otherwise,” said Darren Pollock, a Berkshire investor who's a principal at Cheviot Value Management LLC. They reflect “the sheer volume of cash coming into Berkshire's coffers along with what we think is becoming an increasingly obvious desire to get out of cash as inflation becomes more ingrained.”

On the home front, Berkshire let up on one of its key capital deployment levers, signalling buybacks aren't quite as attractive now. Still, the US$3.2 billion of repurchases it did make, coupled with its other investments, helped shrink the conglomerate's cash pile to roughly US$106 billion — a sum still above Buffett's preferred margin for safety.

The billionaire carefully navigated some of the year's biggest topics, if he addressed them at all. Scarce explicit comments were made on Russia's invasion of Ukraine, though Buffett did address a question about the risk of nuclear weapons. He gave little away about Berkshire's own succession plan.

Buffett gave no indication that he was planning to cede his post anytime soon, and his appearance on stage alongside longtime business partner Charlie Munger, 98, reassured some investors.

Buffett joked that the top managers' ages frankly require a chance for investors to check in on the leaders.

“It's been three years and it's a lot better seeing actual shareholders, owners, partners,” Buffett said to kick the meeting off in the morning. “If you're the owner of a company and you've got two guys — 98 and 91 — running the company, you're entitled to actually see them in person.”

Buffett again addressed inflation. Inflation hurts bondholders, as well as people who stash cash under couches. “It swindles almost everybody,” Buffett said.

Buffett and Munger have been constant skeptics of cryptocurrencies, with Munger calling it a “noxious poison.” The pair aired their deep criticism again on Saturday, with Buffett noting that he'd rather own lots of farmland or apartments — what he calls productive assets — than Bitcoin.

“What would I do with it?” Buffett said. “It isn't going to do anything.”