Warren Buffet has always been a strong advocate of ‘value investing’. The key concept of ‘value investing’ is to buy stocks at a lower price than what they are actually worth. This is a principle that has served Warren Buffet’s fund Berkshire Hathaway extremely well.
Rotating out of cash
In 2020 and 2021 Berkshire Hathaway amassed lots of cash indicating that Warren Buffet was not seeing much value. However, with stocks falling on global growth concerns and many investors heading for the exits, Warren Buffet is starting to buy shares again.
According to Bloomberg, Warren Buffet has been on the biggest stock buying spree in over a decade. He has made $41 billion in net stock purchases in the first quarter in a nod towards concerns over rising inflation. Inflation eats into cash very quickly, so it is perhaps unsurprising that Warren Buffet is trying to offset some of that risk by making purchases as inflation heads towards 10% in the US.
What purchases were made?
Below are the current allocation of over 1% of Berkshire Hathaway’s portfolio.
Some key recent additions include:
Financials (tend to gain when interest rates rise)
Bank of America, Bank of New York Mellon, Citigroup, Diageo, Markel, & US Bancorp
HP, Apple, Activision Blizzard,
Key test of daily trendline
The stock of Berkshire Hathaway itself is testing a key daily trendline. So, will buyers lead against this level in a bid to look for some short term value? Warren Buffet has had an amazing investment career based on the principle of value investing. Will his approach pay off yet again?