Last Saturday, Warren Buffett’s Berkshire Hathaway $BRK.B reported first-quarter earnings for 2022 and had its annual shareholder meeting. In recent years, Warren Buffett has not been buying so many new stocks but last quarter, he bought $51 billion worth of stocks. This is one of his most active quarters in years. The net equity purchase was $41 billion.
Warren Buffett invested more in Chevron $CVX and Occidental Petroleum $OXY. Berkshire Hathaway also increased its position in Apple $AAPL and invested in Activision Blizzard for the arbitrage opportunity.
We will need to wait for the SEC filings to know exactly how much has been bought for each.
What’s interesting about Apple is that this is the stock that contributed the most to the returns of Berkshire Hathaway in recent years. As an investor, you don’t need all your stocks to be big winners, you only need a few. Warren Buffett over his long career had Coca-Cola, American Express, and now Apple.
He was buying Apple since 2016 when the PE ratio was around 10. It is not that cheap anymore but it is cheap enough for him to invest.
We also need to acknowledge his limitations with his big portfolio. Berkshire Hathaway now has nearly $1 trillion in assets.
Berkshire Hathaway also bought back about 2% of the shares outstanding.
The cash balance fell from $160 billion to $124 billion.
Let's talk a little about the earnings of Berkshire Hathaway.The operating income is down 53% but this is because of accounting. If we ignore the investments, the operating income fell by only 2.9%.
With the market in a correction, Berkshire Hathaway has more options in front of it and the stock price is already reflecting that.