Buffett is back with one of his biggest buying sprees in years

After complaining for years that high valuations were thwarting his stock-buying efforts, Warren Buffett’s Berkshire Hathaway Inc is back hoovering up other companies’ shares.

The conglomerate made roughly $41 billion of net purchases in the first quarter, including a boost to its Chevron Corp stake that vaulted the investment into Berkshire’s top four common stock holdings. Buffett also disclosed that the company now holds an expanded 9.5 percent stake in Activision Blizzard Inc. stock -- an arbitrage bet on the video-game maker in the midst of being acquired by Microsoft Corp.

Berkshire hasn’t been this significant of a net buyer of common stocks in any quarter in data going back to 2008. Buffett’s flurry of activity in recent months fueled a number of questions from shareholders on Saturday at its first in-person annual meeting since 2019.

Read: Buffett reveals big investments, rails against Wall Street excess at Berkshire meeting 

The gathering, held in Buffett’s hometown of Omaha, Nebraska, lasted hours as the chief executive officer and his business partner Charlie Munger fielded questions about markets, nuclear weapons and even Bitcoin.

They were joined on stage by two key deputies, Greg Abel and Ajit Jain, who answered questions about the railroad, cyber attacks and auto insurers. Last year, Abel was officially confirmed as the heir apparent to take over as Berkshire CEO from Buffett when he decides to step down.

But Saturday’s event was still dominated by Buffett, 91, and Munger, 98, who both gave no indication that they plan to step back from their roles anytime soon.

Both the executives have slightly lessened other duties in recent years, with Buffett announcing that this year’s charity lunch auction will be his last after more than two decades and Munger relinquishing his chairman title at the Daily Journal Corp.

Buffett and his deputies have struggled in recent years to find ways to put Berkshire’s cash to work in higher-returning assets, due in part to stiff competition from buyers including private equity firms as well as high valuations. But the Berkshire executives were back in action during the first three months of the year, adding more Occidental Petroleum Corp. shares and striking an agreement to buy Alleghany Corp. for $11.6 billion in cash in a deal expected to close in the fourth quarter. That’s in addition to the newly ramped-up Chevron and Activision bets.

“We have so much trouble finding new ideas we find it hard to ignore any,” Buffett said at the meeting in Omaha, Nebraska. Any deal by the conglomerate “has to be sizable now,” he said.

Berkshire’s massive common equity holding in Occidental was one of its biggest disclosed purchases in the first quarter, and came on top of the $10 billion Berkshire had already invested in the oil producer years back. Buffett noted that the investment came together quickly after he spent a weekend reading a presentation from Chief Executive Officer Vicki Hollub.

“What Vicki Hollub was saying made nothing but sense and I decided it was a good place to put Berkshire’s money,” Buffett said. “And two weeks later we had 14 percent of the company.”

Berkshire’s substantial investment in Chevron during the quarter combined with its $10 billion investment in Occidental’s preferred shares add up to a $40 billion bet on the oil sector, said Jim Shanahan, an analyst at Edward Jones.

Cash Pile 

The purchases helped chip away at Berkshire’s cash pile, which ended the first quarter at $106 billion, the lowest since the third quarter of 2018. The hoard had been trending at near-record levels in recent quarters.

As Berkshire revved up its stock-buying engine, the company slowed its roll on share repurchases during the quarter with just $3.2 billion of stock buybacks, the lowest since the same period in 2020 and down from the $6.9 billion repurchased during the last three months of 2021.

Buffett had increasingly leaned on repurchases as one way to put money to work in a competitive deal-making environment. Berkshire’s Class A shares were more expensive during the period, with a gain of more than 17 percent during the first quarter.

The conglomerate eked out a profit gain of just 0.3 percent to $7.04 billion in the first quarter compared to the same period a year earlier. While the manufacturers and retailers were strong during the period, underwriting at the insurers was softer this quarter.

Read: Buffett says inflation an issue for Berkshire, it 'swindles almost everybody'