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Buffett is back with one of his biggest shopping trips in years

(Bloomberg) – After years of complaining that high valuations thwarted his stock buying endeavors, Warren Buffett’s Berkshire Hathaway Inc. back by sucking up other companies’ shares.

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The conglomerate made about $ 41 billion in net purchases in the first quarter, including a boost to its Chevron Corp. stake that vaulted the investment in Berkshire’s top four equity holdings. Buffett also revealed that the company now holds an expanded 9.5% stake in Activision Blizzard Inc. stock – an arbitrage bet on the video game maker in the midst of being acquired by Microsoft Corp.

Berkshire has not been that significant of a net buyer of common stock for any quarter in data dating back to 2008. Buffett’s barrage of activity in recent months raised a number of questions from shareholders on Saturday at its first personal annual meeting since 2019.

The meeting, held in Buffett’s hometown of Omaha, Nebraska, lasted for hours as CEO and his business partner Charlie Munger asked questions about markets, nuclear weapons and even Bitcoin. They were joined on stage by two key deputies, Greg Abel and Ajit Jain, who answered questions about the railway, cyber attacks and car insurance companies. Last year, Abel was officially confirmed as heir to take over as Berkshire CEO from Buffett when he decides to resign.

But Saturday’s event was still dominated by Buffett, 91, and Munger, 98, both of whom gave no indication that they plan to resign from their roles anytime soon. Both executives have reduced other duties a bit in recent years, with Buffett announcing that this year’s charity breakfast auction will be his last after more than two decades, and Munger relinquishing his chairmanship of the Daily Journal Corp.

Buffett and his deputies have struggled in recent years to find ways to put Berkshire’s cash into higher-yielding assets, in part due to fierce competition from buyers, including private equity firms, as well as high valuations. But Berkshire executives were back in action during the first three months of the year, adding more Occidental Petroleum Corp. shares and entering into an agreement to buy Alleghany Corp. for $ 11.6 billion in cash in a deal expected to close in the fourth quarter. This is in addition to the recently increased Chevron and Activision bets.

“We have so much trouble finding new ideas that we have a hard time ignoring anyone,” Buffett said at the meeting in Omaha, Nebraska. Any agreement from the conglomerate “must be significant now,” he said.

Berkshire’s massive shareholding in Occidental was one of its biggest announced acquisitions in the first quarter, coming on top of the $ 10 billion that Berkshire had already invested in the oil producer years ago. Buffett noted that the investment came together quickly after he spent a weekend reading a presentation by CEO Vicki Hollub.

“What Vicki Hollub said made no sense, and I decided it was a good place to put Berkshire’s money,” Buffett said. “And two weeks later, we had 14% of the company.”

Berkshire’s significant investment in Chevron during the quarter combined with its $ 10 billion investment in Occidental’s preferred stock puts up to a $ 40 billion bet on the oil sector, says Jim Shanahan, an analyst at Edward Jones.

Cash pile

The purchases helped discard Berkshire’s pile of dollars, which ended in the first quarter at $ 106 billion, the lowest since the third quarter of 2018. Taxes had tended to near record highs in recent quarters.

As Berkshire gained momentum on its stock buying engine, the company slowed its share buyback during the quarter by just $ 3.2 billion in share buybacks, the lowest since the same period in 2020 and down from the $ 6.9 billion repurchased during the quarter of the last three months. 2021. Buffett had increasingly relied on repurchases as a way to put money into work in a competitive trading environment. Berkshire’s A shares were more expensive during the period, with gains of more than 17% in the first quarter.

The conglomerate achieved a gain of only 0.3% to $ 7.04 billion in the first quarter compared to the same period last year. While manufacturers and retailers were strong during the period, insurance companies’ subscriptions were softer this quarter.

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(Updates with Activision details in the second section, lack of succession speech in the fourth section.)

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