Buffett lures fans to Omaha with stock buys, inflation talk
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, Nebraska, 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 $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.”
Buffett said he couldn’t predict the trajectory of inflation over the coming months or years, though he said he’s seen price increases across his businesses. He also conceded — as he’s done before — that his firm hasn’t always been good at timing its asset purchases, though it’s been “reasonably good at figuring out when we were getting enough for our money.”
On the home front, Berkshire let up on one of its key capital deployment levers, signaling buybacks aren’t quite as attractive to the firm right now. Still, the $3.2 billion of repurchases it did make, coupled with its other investments, helped shrink the conglomerate’s cash pile to roughly $106 billion — a sum that’s still above Buffett’s preferred margin for safety.
Berkshire’s stake in Chevron, which totaled nearly $4.5 billion at the end of 2021, hit $25.9 billion at the end of March, according to its first-quarter regulatory filing. The firm’s Activision stake, which accounted for just 1.87% of the video game company’s common stock, jumped to 9.5% as Berkshire wagered its deal with Microsoft Corp. would safely close. Activision stock was up 2.5% to $77.51 at 8:11 a.m. in early New York trading Monday.
“It is my purchases, not the manager who bought it some months ago,” Buffett said on Saturday about the increased Activision stake. “If the deal goes through, we make some money and if the deal doesn’t go through, who knows what happens.”
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.