When asked about
investment success at the company’s annual meeting in April, CEO Warren Buffett said Berkshire is often early. He pointed to the company’s big stock buybacks in late 2008, months before the stock market crashed in March 2009.
“We weren’t good at timing, we were pretty good at knowing when we were getting our money’s worth,” Buffett said.
Berkshire Hathaway (Ticker BRK/A, BRK/B) has been an active buyer of stocks this year, especially in the first quarter, when it bought more than $50 billion.
Some of these markets now appear to be in the red, mostly
(PARA), and printer and PC manufacturer
), Barron’s calculates. That means investors can buy those shares for less than what Buffett or his two investment lieutenants, Todd Combs and Ted Weschler, paid for the shares.
Barron’s estimates that Berkshire paid an average of about $35 per share for HP, compared with Monday’s closing price of $26.94, and about $58 per share for Citigroup, compared with the current price of $48.26. We estimate that Berkshire paid an average of about $32 per share for Paramount, the parent of CBS, versus Monday’s close of $23.10. Berkshire had no immediate comment.
Berkshire owns about $2.6 billion of Citigroup. Paramount’s $1.8 billion and HP’s $3.3 billion, based on its reported inventory as of June 30.
Berkshire’s average cost for those three investments has not been disclosed, but Barron’s estimates them based on their average prices from Feb. 22 to March 15, when Berkshire made most of its purchases in the first quarter. Buffett referred to this window at the annual meeting, saying that Berkshire took advantage of the market decline during that three-week period to aggressively buy stocks.
Berkshire’s major markets
(OXY) are in the black this year. Berkshire began buying in early 2022 and steadily added to its holdings in early August with the company now owning 188 million Occidental shares, a 20% stake, worth $12 billion. Barron’s estimates, based on Berkshire filings, that the company paid about $54 per share for its majority stake in the major energy producer. Occidental closed Monday at $64.68 per share.
Berkshire bought most of its large stake
(CVX) in the first quarter, paying what we estimate is about $155 per share in those three months, versus a current price of nearly $157. Berkshire now owns about $25 billion of Chevron.
Berkshire appears to be in the red on its holding
(ATVI), which it bought heavily in the first quarter at what we estimate to be about $80 a share, compared to Monday’s close of about $76.
Buffett said at the annual meeting that he bought Activision this year after
January deal to buy the video game maker for $69 billion, or $95 per share. Either Combs or Weschler had bought a smaller position in late 2021.
Buffett’s view was that Activision’s spread arbitrage was attractive. The wide spread—now about $19 a share—reflects antitrust concerns. He told Berkshire’s owners that he didn’t know how regular antitrust agencies would act, but “one thing we do know is that Microsoft has the money.” Berkshire owns about $6 billion of Activision.
Buffett has not said whether he or Combs or Weschler bought the HP, Paramount or Citigroup investments. Combs and Weschler manage about 10% of Berkshire’s equity portfolio, which totaled about $340 billion as of June 30.
Berkshire’s largest holdings of $5 billion or more tend to be Buffett’s, while the smaller ones of $1 billion to $3 billion often come from Combs and Weschler.
Some investors believe that Berkshire’s holdings in stocks such as General Motors (GM),
(DVA) was probably started by Combs or Weschler.
Regarding timing, Buffett told the meeting that he is often happy if a stock falls after Berkshire initially buys it so he can buy more, and that he “completely missed” the big market opportunity in March 2020, when the market plummeted before climbing to new heights. . Berkshire has been a light buyer of stocks in 2020.
Berkshire has also traded more in its shares in recent years — contrary to Buffett’s often-stated view that his favorite holding period is forever.
Berkshire sold its airline holdings in the second quarter of 2020 and dumped most of its holdings in
(GS) in 2020. Bank stock sales were not well timed. And Berkshire has sold off some drug stocks, including
(ABBV) and Merck (MRK) which it bought in late 2020.
Write to Andrew Bary at firstname.lastname@example.org