Warren Buffett's Berkshire Hathaway has spent nearly $60 billion on stocks this year – and shows no signs of stopping

Warren Buffett.AP Images

  • Warren Buffett’s Berkshire Hathaway has spent nearly $60 billion on stocks this year.

  • Berkshire invested $57 billion in the first half, then piled a further $1.7 billion into Oxy stock.

  • It has spent almost $50 billion on stocks on a net basis, dwarfing its outlays in past years.

Warren Buffett and his team have plowed nearly $60 billion into stocks this year, dwarfing their spending on equities in previous years.

Buffett’s Berkshire Hathaway conglomerate spent about $57 billion on stocks in the first half of this year — more than it invested in the past three years combined. It established multibillion-dollar positions in Citigroup, Paramount, and Activision Blizzard, and more than quadrupled its Chevron holdings, giving it a roughly $25 billion stake in the oil major.

Berkshire has piled another $1.7 billion into Occidental Petroleum shares since the end of June, raising its total known expenditure on stocks this year to nearly $59 billion.

Subtract Berkshire’s $12 billion of stock sales in the first half, and the company’s net purchases still approach $50 billion. In contrast, Buffett’s company sold a net $12 billion of stocks between the start of 2019 and the end of 2021, as it jettisoned $69 billion of shares from its portfolio during that period.

Berkshire’s previous record for annual spending on stocks was $43 billion in 2018, or $24 billion on a net basis, according to a Markets Insider analysis of data going back to 1993.

Buffett and his business partner, Charlie Munger, explained their sudden and unprecedented buying spree during Berkshire’s annual shareholder meeting earlier this year.

Munger simply stated they had found assets that were more attractive to hold than Treasury bills. Buffett pointed to the enormous trading volume of Occidental shares, which allowed Berkshire to buy 136 million shares or 14% of the energy company in just 11 trading days.

The Berkshire CEO added that investors were treating the stock market like a casino, and trading shares of some of America’s largest companies like poker chips, to an extent he had never seen before.

Prior to this year, Buffett and his team were struggling to find bargains as stocks hit record highs, private equity firms and special-purpose acquisition companies (SPACs) pushed up the price of acquisitions, and Berkshire’s rising stock price made share repurchases less compelling.

As a result, Berkshire’s cash pile ballooned to a record $149 billion in the third quarter of last year. It shrunk by 30% to $105 billion in the first half of this year, largely thanks to the company’s aggressive stock buying.

Buffett is known for biding his time and stockpiling cash during market booms, then pouncing when asset prices crash and companies become desperate for a buyer or investor. The 91-year-old value investor used that strategy to good effect after the dot-com bubble burst, and during the financial crisis.

Similarly, the Berkshire CEO has welcomed the market downturn this year — fueled by concerns about inflation, recession, foreign conflicts, pandemic disruptions, and other headwinds — as a chance to buy stocks on the cheap.

Here’s a chart showing the unprecedented scale of Berkshire’s stock purchases this year:

A chart showing Berkshire’s stock purchases and sales over the years.Berkshire Hathaway/Markets Insider

Read more: MORGAN STANLEY: Investors shouldn’t be fooled by the bear market rally – but they should buy these 22 undervalued stocks that will beat the S&P 500 over the next year

Read the original article on Business Insider

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