In Monday’s trading day, there is no doubt, like every year, that all stocks will push higher after Berkshire Hathaway’s annual shareholder meeting. (If they don’t, then I just look like an idiot.) The same shabang as every year that makes investors optimistic that push said stocks higher, Buffett is optimistic on stocks, he is a net buyer of stocks, he is showcasing the cash and cash equivalents in Berkshires portfolio. Here are a few takeaways that I found interesting during the meeting.
Buffett defends Amazon purchase
During the meeting, Buffett discloses that they have dipped their toes in Amazon, however, the media gave them backlash by saying that Buffett has completely abandoned value investing in entirety and that Amazon has much to prove and is overvalued.
While Buffett did not make the purchase directly, his two other money managers, Todd or Ted, made the purchase. He goes on to defend them by saying that value investing itself is not just determined by the PE (price to earnings) ratio and the book value to assess equity purchases at fair prices. Buffett taught and mentored Todd and Ted how to find great companies at great prices, if they purchased Amazon at $1,980 per share, than so be it. He does not second guess their investments.
Buffett has mentioned that he regrets not investing in Amazon years ago when he first met the CEO and founder Jeff Bezos.
Investment in energy
Berkshire has been slimming down on their positions in the energy sector, most recently, they sold majority of their Phillips 66 stake. It used to own a 9.8% of the company, now owns a modest 4.2%.
Berkshires portfolio consists of 0.70% of energy, but has only recently been ramping his position in Energy. Most recent and notable purchase, Suncor energy, a Canadian oil company. Berkshire bought a hefty 10.7 million shares or a price of $348 million.
Another notable investment, more so financing, was Occidental Petroleum. Buffett pledges to give $10 billion to help Occidental in purchasing and acquiring Anadarko Petroleum. In return, Occidental gives Berkshire ownership of 100,000 shares and a 8% dividend.
Kraft Heinz is by far Berkshires biggest loser in his portfolio. Buffett admits that Berkshire paid too much for Kraft Heinz.
Berkshires BIG CASH AND CASH EQUIVALENTS
While it was a silent first quarter for Berkshire to make any new purchases, they went hard end of year as the S&P, Dow, and NASDAQ fell 4th quarter 2018. Most notably, they made purchases in the financial sector. $1.6 bn in JPMorgan chase, $581 million in Bank of America, $346 million in Travelers companies, $298 million in PNC, $234 million in US Bancorp, and $154 million in Bank of New York Mellon corp. Lastly, it bought back $1.7 billion in class A and B shares of Berkshire Hathaway. EVEN AFTER ALL THESE PURCHASES WERE MADE BUFFETT AND BERKSHIRE ARE STILL SITTING ON TOP OF GUAC. STILL SITTING ON A “MODEST” $114,2 BILLION.
There will only be one Warren Buffett and one Charlie Munger that has ever walked this world, Buffett, now 88 and Munger, now 95, aren’t going to be on this earth for much longer and the biggest question every Berkshire shareholder is asking is who will run the $600 billion conglomerate and can they have this much trust in their next CEO as they did with both Buffett and Munger. Buffett has hinted that either Greg Abel or Ajit Jain would be the ones who look after once Buffett and Munger pass away.
Buffett still remains to be the baddest bitch in investing. He will always be the GOAT. No one will compare to Buffett and his brilliant investing mind.