Berkshire Hathaway AGM: Buffett is following a proven strategy in times of rising inflation

Buffett speaks at shareholder meeting about impact of inflation
Berkshire Hathaway is investing more in times of rising inflation
Share buybacks declined in the first quarter

At the annual Berkshire Hathaway shareholders’ meeting in Omaha last Saturday, Warren Buffett again spoke about the effects of inflation – he had already warned shareholders last year. “It cheats almost everyone,” Yahoo Finance echoes the Berkshire CEO. “If you could really have a rock-solid unit of monetary use for the next hundred years, it would be better for businesses and investors in general,” said the investor legend.

Rising inflation – Berkshire Hathaway is investing more again

As Russia launched its war of aggression against Ukraine and US inflation soared, Warren Buffett followed a proven strategy and started investing more money after his investment holding company’s cash position had grown strongly in recent years.

So Buffett stocked up on shares of Occidental Petroleum and increased his holdings in Chevron and Activision Blizzard – even though Buffett spoke of “extraordinary” price increases at Berkshire Hathaway companies, according to Yahoo Finance. Berkshire’s Chevron holding, which was about $4.5 billion at the end of 2021, was about $25.9 billion at the end of March. Activision Blizzard’s stake, which accounted for just 1.87 percent of the video game company’s common stock, has risen to 9.5 percent as Berkshire bet on Microsoft’s acquisition, according to Yahoo Finance. At the beginning of April it was announced that Buffett and his holding company had bought a multi-billion dollar package of HP shares. The 121 million HP shares were valued at around $4.2 billion based on the closing price at the time. Overall, Buffett’s investment vehicle made $41 billion in net stock purchases in the first quarter, the highest in data going back to 2008, according to Yahoo Finance.

In March, Berkshire Hathaway also announced the acquisition of US insurance group Alleghany. However, the Alleghany takeover is not expected to be completed until the fourth quarter and will cost Berkshire $11.6 billion.

Investor: Berkshire investing should do well in any environment

However, at the annual Berkshire Hathaway shareholders’ meeting, Buffett was also confronted with questions as to why he had not taken advantage of the downturn caused by the corona pandemic. Buffett admitted, according to Yahoo Finance, that Berkshire Hathaway hasn’t always been good at timing its asset purchases, but the investment holding company has been pretty good at figuring out when it’s getting enough bang for its buck. He also stated that although he said he saw price increases in his companies, he could not predict the course of inflation in the coming months or years.

According to Yahoo Finance, Berkshire investor Darren Pollock, who works at Cheviot Value Management LLC, said: “As long as Buffett and his team pay reasonable prices for quality companies, these investments should do well in any environment – inflationary or not “. They reflected, he said, “the sheer volume of cash flowing into Berkshire’s coffers, along with what we think is becoming a more apparent desire to get out of cash as inflation becomes more ingrained “.

Fewer share buybacks

However, Berkshire Hathaway’s share buybacks eased somewhat in the first quarter, signaling that they may not be as attractive for the company right now. After the investment holding company spent $6.9 billion on share buybacks in the fourth quarter of 2021, it was $3.2 billion in the first quarter, which with the other investments still contributed to the cash balance of $146.7 billion -dollars to approximately $106 billion.

Editorial office finanzen.net

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