investment success at the company’s annual meeting in April, CEO Warren Buffett often said that Berkshire is soon. He cited the company’s large equity purchases in late 2008, months before the stock market bottomed in March 2009.
“We weren’t good at the time, we were pretty good at figuring out when we were getting a lot for our money,” Buffett said.
Berkshire Hathaway (Ticker BRK/A, BRK/B) has been an active buyer of stocks this year, mainly in the first quarter when it bought over $50 billion.
Some of those purchases seem to be in the red now, especially
(PARA), and a printer and computer maker
), Barron’s estimates. This means that investors can buy these stocks for less than what Buffett or his two investment lieutenants, Todd Combs and Ted Weschler, paid for the shares.
Barron’s He estimates that Berkshire paid an average of about $35 a share for HP, against its closing price on Monday of $26.94 and about $58 a share for Citigroup, compared to a current price of $48.26. We estimate that Berkshire paid an average of about $32 a share for Paramount, parent of CBS, against Monday’s close of $23.10. Berkshire had no immediate comment.
Berkshire owns about $2.6 billion of Citigroup; $1.8 billion of Paramount and $3.3 billion of HP, based on its reported holdings on June 30.
Berkshire’s average cost for these three investments was not disclosed but Barron’s is estimating them based on their average prices from February 22 to March 15 when Berkshire made most of its purchases in the first quarter. Buffett alluded to that window at the annual meeting, saying that Berkshire took advantage of the market downturn during that three-week period to buy stocks aggressively.
Berkshire’s major purchases
(OXY) is in the black this year. Berkshire began buying in early 2022 and steadily added to its holdings in early August and the company now owns 188 million Occidental shares, a 20% stake, worth $12 billion. Barron’s estimates, based on Berkshire’s filings, that the company paid about $54 for most of its holdings in the major energy producer. Occidental closed Monday at $64.68 a share.
Berkshire bought most of its large stake in
(CVX) in the first quarter, paying what we estimate will be about $155 a 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 in its holdings
(ATVI), which it bought heavily in the first quarter at what we estimate to be about $80 a share, versus Monday’s close of about $76.
Buffett said at the annual meeting that he bought Activision later this year
January agrees to buy the video game maker for $69 billion, or $95 a share. Combs or Weschler had purchased a smaller site in late 2021.
Buffett’s view was that Activision’s arbitrage spread was attractive. The wide spread – now around $19 a share – reflects concern versus confidence. He told Berkshire shareholders that he did not know how antitrust regulators 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 run about 10% of Berkshire’s equity portfolio, which was worth about $340 billion as of June 30.
Buffett’s larger Berkshire holdings tend to be $5 billion or more while Combs and Weschler’s smaller ones often come in the $1 billion to $3 billion range.
Some investors think that Berkshire’s holdings in stocks such as General Motors (GM),
(DVA) probably initiated by Combs or Weschler.
As for the timing, Buffett said at the meeting that he is often happy if a stock goes down after Berkshire first bought it so he can buy more and that he “totally earned” the big market opportunity in March 2020 when the market collapsed before reaching new highs. . Berkshire has been a light buyer of stocks in 2020.
Berkshire has also traded more of its stock in recent years — contrary to Buffett’s oft-cited belief that it is his all-time favorite holding period.
Berkshire sold off its airline holdings in the second quarter of 2020 and dumped most of its commitments in
(GS) in 2020. The stock-bank sales were not well timed. And Berkshire has sold off a number of drug stocks including
(ABBV) and Merck (MRK) which it bought in late 2020.
Write to Andrew Bary at email@example.com