Warren Buffett Spends Big as Stock Market Sells Off

The stock market sell-off is bad news for most investors.

The Omaha-based company purchased 901,768 shares of Occidental Petroleum Corp.

OXY 8.21%

last week, according to a regulatory filing. The move could set off an Occidental event, in which Berkshire began buying shares at the end of February, one of its 10 biggest holdings.

Over the past few months, Berkshire has also stepped up its stake in Chevron Corp.

CVX 1.92%

merger-arbitrage bet on Activision Blizzard Inc.

ATVI 0.47%

bought 11% shares of HP Inc.

HPQ 2.62%

and continues to strengthen its position in Apple Inc., the company that owns the largest shares.

Investors will take a look at what Berkshire has bought – as well as what Berkshire has sold – when it files what is known as Form 13F with the Securities and Exchange Commission on Monday. The SEC requires all institutional investors managing more than $100 million to file forms within 45 days of the end of each quarter. Since institutions must disclose their equity according to the form, as well as the size, and market value of each position, investors often use the 13F to gauge how large their managers are. currencies are playing on the stock market.

One takeaway from Berkshire’s filing could be this: The market turmoil has allowed the company to keep spending.

Mr. Buffett, a longtime expert on value investing, has long advised that investors “be greedy when others are fearful”. That philosophy has seemed difficult to implement over the past two years, in which the mood of investors has been mostly anything but fear. Now that the market is down, Berkshire is in a prime position to add to its massive stock portfolio, investors say.

“Cash is dry powder, and he has plenty of it,” said Buffett, Rupal Bhansali, chief investment officer of global equities at Ariel Investments. Ms. Bhansali manages Ariel’s global mutual fund, which owns shares of Berkshire.

Ms. Bhansali, among others, also believes that Berkshire’s investments in Chevron and Occidental may reflect a bet that commodity prices will continue to rise for some time.

Energy shares have by far been the best performer in the S&P 500 this year, benefiting from a rise in commodity prices that began after Russia’s invasion of Ukraine stoked fears of disruption to the economy. oil and gas supply lines. Shares of Chevron are up 43% this year, while shares of Occidental are up 121%. Meanwhile, the S&P 500 fell 16%.

“Obviously they own companies that have the potential to become an inflation hedge,” Ms. Bhansali said.

Jim Shanahan, senior equity research analyst at Edward Jones, said energy stocks also have two characteristics that Mr. Buffett often looks for: low valuations, as well as shareholder return in the form of buybacks. and dividends.

Dividend-paying stocks have outperformed the S&P 500 index this year, in part because investors affected by market volatility have sought stocks that can deliver cash returns. stable.

“It fits the profile,” Mr. Shanahan said of Berkshire’s purchase of Chevron and Occidental shares.

With stock volatility continuing to increase, many investors and analysts expect Mr. Buffett, as well as Berkshire portfolio managers, Ted Weschler and Todd Combs, to keep putting the money. market in the coming months.

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Berkshire ended last year with a mountain of cash — not so much because of its desire to build up its war arsenal, but because it couldn’t find companies that looked like they were worth investing in for the long term, Buffett said. shareholders in his annual letter sent in February. It had $106.3 billion in cash on March 31, down from $146.7 billion at the end of 2021.

This year has changed that. David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business, said: “With tightening monetary policy, slowing economic growth and protracted supply chain disruptions are driving the market to the brink of collapse. The market thrives, Mr. Buffett is in his composition.

“This is what I consider the bright spot of Warren Buffett,” said Mr. Kass. “The near-wholesale sale in the market has provided an opportunity for Berkshire to buy securities at bargain prices.”

Write to Akane Otani at akane.otani@wsj.com

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Edmund DeMarche

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