As stock prices began to slide in early 2022, 91-year-old investment legend Warren Buffett sprang into action and began buying up shares of companies for his Berkshire Hathaway portfolio.
As Berkshire spent its sizeable reserve of excess cash, Buffett has bought everything from furniture companies to oil majors. So, exactly what stocks did Warren Buffett buy in 2022?
What Has Buffett Bought This Year?
As of the most recent reporting, Berkshire Hathaway has bought shares in 16 companies in 2022, with the transactions totaling about $50 billion. Below is a list of all the companies Buffett has purchased this year, listed in order of the number of shares Berkshire has acquired:
- Paramount Global
- Activision Blizzard
- Ally Financial
- Occidental Petroleum
- Formula One Group
- Floor & Decor
- General Motors
- Berkshire Hathaway (share repurchases)
What’s New and What’s the Same?
The list of stocks above includes some classic Buffett favorites, such as Apple and RH. It also includes, however, some stocks that Buffett has not previously shown any interest in. One of the major changes Buffett watchers will notice is the inclusion of Citigroup.
The financial institution appears to have been a replacement for Wells Fargo, one of Buffett’s longtime favorites stocks. Berkshire liquidated its entire position in Wells Fargo earlier this year, and Citigroup seems to be the new favored financial stock in the company’s portfolio.
Berkshire also appears to be recalibrating after a brief foray into the booming pharmaceutical industry. After selling off his stakes in AbbVie and Bristol Myers Squibb, Buffett seems to be returning to more familiar territory.
Consumer products, financials and energy are well-represented on this list. This suggests that Buffett is attempting to refocus the Berkshire portfolio on solid, predictable businesses rather than innovative tech or pharma plays.
Another interesting takeaway is that Buffett appears to believe that oil prices will remain elevated for quite some time, bolstering earnings and share prices in the energy sector.
While many of these companies have sold off substantially this year, Chevron is actually up 23.37 percent. Buffett’s bullishness on oil, therefore, almost certainly reflects a belief that energy prices will not return to normal anytime in the immediate future.
It’s also worth noting that the current circumstances have finally given Buffett and his team the opportunity to deploy the record cash reserve Berkshire has been sitting on as it waited for new investment opportunities.
At the beginning of 2022, Berkshire had $147 billion in cash. Because share prices had been excessively high, the company struggled to find suitable investments. When the market began to correct earlier this year, though, Buffett clearly jumped on the opportunity to put his company’s cash reserve to work.
Finally, Berkshire shareholders should be pleased with the recent pace of share buybacks the company has pursued. With fewer shares available on the market, existing shareholders can expect to see the value of their stocks rise steadily. Buybacks are the only tool Buffett has for immediately rewarding shareholders, as he has historically resisted paying dividends.
Value Investing Is Still King at Berkshire
The biggest takeaway from Buffett’s list of acquisitions is that he is still following the value investing principles that built Berkshire Hathaway. Right now, Buffett appears to be taking advantage of mis-pricings in the market to acquire undervalued shares in strong, reliable companies.
Consider as an example the company in which Berkshire has bought the most shares, HP. The stock is down 6.48 percent YTD and trades at a P/E ratio of just 6.33. Paramount Global appears similarly positioned, having lost 14.65 percent of its value YTD and with a P/E ratio of just 4.22.
There are, however, a few deviations from long-term value plays involved in the recent purchasing program. Activision Blizzard, for instance, is part of a merger arbitrage deal.
As such, the shares will be turned around for a profit on a relatively short timeline. Buffett has been known to engage in such deals over the years, provided the stock is good enough to own if the deal falls through.
Buffett is also sticking closely to perhaps his best-known piece of investing advice. Known for saying to be greedy when others are fearful, Buffett has obviously put his cash reserve aggressively to work while other investors and institutions are selling their shares.
This kind of rapid buying at low prices is the core of Buffett’s value investing strategy. It’s also why Berkshire has been sitting on so much cash, as that reserve was being held for a time when more opportunities existed to deploy it.
Lessons From Warren Buffett’s Purchases
Looking a bit deeper, there are also a few insights to be gained on the direction Buffett sees the American economy going. Companies like RH and Apple produce high-priced goods that fall outside the bounds of consumer staples. While inflation may curb consumer spending in the short-term, it’s clear that Buffett sees a recovery on the horizon.
The list above also demonstrates Buffett’s ongoing belief that a company doesn’t have to grow exponentially to be a great investment. Legacy businesses like GM and HP are almost certainly past their peak growth periods. They both, however, are extremely well-established companies that still bring in ample revenues and produce solid earnings. When purchased at the right price, such businesses are usually winners for Buffett.
Finally, it’s worth noting that many of the purchases were stocks Berkshire Hathaway already held. This suggests that Buffett is still confident in the core of his portfolio, even though he has shed some of his other holdings this year.
In some ways, Warren Buffett’s stock purchases in 2022 are different from what he would have been buying 20 or 30 years ago. At their core, though, they still represent the same value strategies that have made Berkshire Hathaway what it is today. Solid companies trading at prices below their intrinsic are Berkshire’s bread and butter, and it appears that the 2022 buying rush is no exception to this longstanding rule.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.