Warren Buffett’s Berkshire Hathaway has deployed nearly $90 billion in the past three years.
Berkshire’s gross spending on stocks hit $107 billion, but it purchased $18 billion on a net basis.
Buffett’s team also spent $60 billion on buybacks and acquired Alleghany for $12 billion.
Warren Buffett’s Berkshire Hathaway has put almost $90 billion to work in the past three years — but still ended 2022 with a nearly $130 billion cash pile, its latest annual report shows.
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The famed investor’s company purchased close to $107 billion worth of stocks — roughly Intel’s market value — over the course of 2020, 2021, and 2023. However, it also sold $88 billion worth of shares, meaning its net outlay was $18 billion.
Meanwhile, Buffett and his team spent a then-unprecedented $25 billion on stock buybacks in 2020, then set a new record of $27 billion the following year. They bought back another $8 billion of Berkshire stock in 2022, lifting their total repurchases over the three-year period to about $60 billion.
Berkshire also bought insurer Alleghany for roughly $12 billion last year. Tally up the net stock purchases, buybacks, and acquisition spend, and the conglomerate deployed $89.5 billion over the past three years.
Buffett’s spending spree is notable not just for its massive scale, but also its context. Stocks soared during the pandemic, private equity firms and special-purpose acquisition companies (SPACs) bid up the price of acquisitions, and even Berkshire shares reached new highs.
That was a frustrating state of affairs for a bargain hunter like Buffett, who repeatedly bemoaned the lack of compelling purchases during the pandemic. Berkshire was holding well over $100 billion in cash and US Treasuries that, until last year, were paying almost nothing in interest. In short, Buffett had money to burn but little to buy.
The investor and his team responded by widening their net. For example, they built multibillion-dollar stakes in the five largest Japanese trading houses. They also bought a piece of Nubank, a Brazilian financial-technology company.
Moreover, they bit the bullet and ramped up repurchases despite Berkshire’s elevated stock price. Buffett also leveraged his friendship with Alleghany CEO Joe Brandon to buy the executive’s company.
Berkshire’s defiant spending hasn’t completely cured Buffett’s headache, as his conglomerate still ended 2022 with $129 billion in cash and short-term investments. But the Federal Reserve has hiked interest rates from nearly zero to upwards of 4.5% over the past year, boosting the return from those assets.
Buffett has also pledged to maintain at least $30 billion in reserve, as he wants to ensure Berkshire is never caught short of cash. Berkshire is one of the world’s largest insurance companies, and could unexpectedly face a tsunami of claims to pay out one day.
Moreover, Buffett always maintains a war chest for tough times. He struck some of his most lucrativedeals during the financial crisis, when funding dried up and he was one of the few lenders left standing. He’s also noted that periods of fear and panic are often opportunities to snap up cut-price stocks and businesses.
Warren Buffett’s luck changed this year, allowing him to spend a record sum on stocks and end his deal drought. Here are his 6 highlights of 2022.
Warren Buffett spent a record sum on stocks and made a major acquisition in 2022.
The Berkshire Hathaway CEO tore into bitcoin, adjusted some overseas bets, and gave a surprise gift.
Here are the investing icon’s 6 highlights of 2022.
Warren Buffett’s luck changed in 2022. After years of battling to find bargains and watching Berkshire Hathaway‘s cash stack up, the famed investor seized his chance to put his conglomerate’s mountain of money to work.
Buffett spent a record sum on stocks, executed a major acquisition, and made some striking changes to his overseas bets. He also crowed about four of Berkshire’s key holdings in his yearly letter, trashed bitcoin at the annual shareholders’ meeting, and made a surprise donation to his children’s charities.
Here are Buffett’s 6 highlights from 2022:
The annual letter
Buffett published his famous annual letter to Berkshire shareholders in February.
The investor vented his frustration with Berkshire’s mammoth $144 billion cash pile, blaming a lack of bargains in the stock market. He also celebrated the “Four Giants” among Berkshire’s businesses: insurance, railroads, energy, and its enormous Apple stake.
Moreover, Buffett appeared to respond to criticism of his tax practices by noting Berkshire paid $3.3 billion of federal income tax in 2021 — nearly 1% of all the corporate income taxes collected by the US government that year.
Buffett struck a deal to buy Alleghany for nearly $12 billion in March. Berkshire completed its takeover of the insurer in October, ending a years-long drought on the acquisition front.
The investor showcased his trademark approach to dealmaking, which prizes trust and simplicity. He proposed the merger over dinner with Alleghany’s CEO, who previously ran a Berkshire subsidiary, and the pair formally announced a deal less than two weeks later.
Buffet also refused to budge on the deal terms, and when Alleghany enlisted Goldman Sachs as a financial advisor, he insisted the investment bank’s fee was subtracted from Berkshire’s offer price.
An epic buying spree
Berkshire plowed a net $41 billion into stocks in the first quarter of 2022, setting a new record for its quarterly spending on equities.
Buffett and his team built large stakes in HP, Chevron, Occidental Petroleum, Citigroup, Paramount, and Taiwan Semiconductor in the first nine months of 2022. Berkshire also spent over $5 billion on buybacks and made other sizeable purchases, lifting its spending on stocks and acquisitions for the year to an astounding $70 billion or so.
The annual meeting
Buffett hosted Berkshire’s annual shareholder meeting in his hometown of Omaha, Nebraska in April, after two years of virtual gatherings due to the pandemic.
The investor called out the reckless speculation in the stock market, underlined the grave threat posed by inflation, and declared he wouldn’t pay $25 for all the bitcoin in the world.
Buffett made some big moves in 2022 that deserve special attention. For example, he poured a total of about $30 billion into Chevron and Occidental, propelling the pair of oil-and-gas companies onto the list of Berkshire’s most-valuable holdings.
The investor and his team also revealed in November they had boosted their billion-dollar bets on Japan’s five largest trading houses.
In contrast, they sold BYD shares for the first time in 14 years. Berkshire has now slashed its position in the Chinese electric-vehicle maker by around 22%, and pocketed an estimated $1.2 billion profit from the disposals.
An unexpected gift
Buffett made his usual annual donation of Berkshire stock in June, dividing the $4 billion gift between the Bill & Melinda Gates Foundation and four of his family’s charities.
Unexpectedly, he contributed a further $759 million worth of Berkshire stock to his three children’s foundations for Thanksgiving, saying he was proud of their charitable work and wanted to show his appreciation.
