Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
The 16 companies Warren Buffett bought in 2022
Investing icon Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful”. And that’s exactly what he and his partner Charlie Munger have been doing. When markets were soaring over 2021, his holding company Berkshire Hathaway Inc (NYSE: BRK.A) was a net seller for five consecutive quarters. But since investors have been spooked by the market decline in 2022, Buffett unsurprisingly has been adding to new and existing positions.
For the first quarter of 2022, he purchased a whopping $41 billion in net equities across 16 companies. It’s Berkshire’s largest spending spree since 2008.
Berkshire added to Chevron Corporation (NYSE: CVX), which is now the conglomerate’s fourth-largest equity position. The oil giant has benefitted from rising commodity prices and is a solid inflation hedge shielding the remainder of the portfolio. Similarly, Buffett has acquired a 14% stake in Occidental Petroleum Corporation (NYSE: OXY). Buffett previously said the investment was a bet on domestic oil production and global oil prices. He noted the benefit of being able to produce domestically rather than finding “11 million barrels a day somewhere else in the world to take care of keeping the American industrial machine working”.
He also added to positions in Floor & Decor Holdings Inc (NYSE: FND), Liberty Media Formula One Group (NASDAQ: FWONA), Restoration Hardware Holdings Inc (NYSE: RH), General Motors Company (NYSE: GM) and Apple Inc (NASDAQ: AAPL). C
Activision Blizzard Inc (NASDAQ: ATVI) is different to the rest of the purchases. Buffett is going down the merger arbitrage game, a type of investing he and Munger use to do “50 years ago”. The spread between the share price and the takeover offer by Microsoft Corporation (NASDAQ: MSFT) seemed too big, so he purchased 9.5% of the company betting the deal goes through.
Other new positions include Paramount Group Inc (NYSE: PARA), Ally Financial Inc (NYSE: ALLY), McKesson Corporation (NYSE: MCK), Markel Corporation (NYSE: MKL), Nu Holdings Ltd (NYSE: NU), Celanese Corporation (NYSE: CE), Alleghany Corporation (NYSE: Y) and HP Inc (NYSE: HPQ).
Berkshire exited Wells Fargo & Co (NYSE: WFG) – a company it first bought in 1989 – and replaced it with Citigroup Inc (NYSE: C). The bank is currently undergoing a turnaround into more profitable services after historically underperforming peers. Citi currently trades below its book value, suggesting its assets are worth less than stated or the business itself will go backwards.
The two other exists are AbbVie Inc (NYSE: ABBV) and Bristol-Myers Squibb (NYSE: BMY). Buffett also reduced investments in Kroger Co (NYSE: KR), Verizon Communications (NYSE: VZ), Store Capital Corp (NYSE: STOR) and Royalty Pharma plc (NASDAQ: RPRX).
Buffett continues to “bet on America”, evident by his purchases in staple industries like furniture, cars and consumer electronics. Interestingly, the divestments largely centre on pharmaceutical companies. Buffett has said he doesn’t try to predict macro factors like inflation or interest rates, instead focusing on the intrinsic value of the business. Clearly, he thinks the recent market weakness is a buying opportunity.
Information warning: The information in this article was published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169
