Warren Buffett’s Berkshire Hathaway spends $9bn on stocks in Q3

Warren Buffett's Berkshire Hathaway made a huge move back into stocks in the third quarter, with a net purchase of shares worth $3.7bn. It included buying up stock in energy firm Occidental Petroleum, in addition to video game developer and publisher, Activision Blizzard.

Billionaire investor Warren Buffett's Berkshire Hathaway [BRK.A], [BRK.B] made a huge move back into stocks in the third quarter, making net purchases of $3.7bn. Berkshire Hathaway’s Q3 earnings, released on 5 November, revealed the company purchased approximately $9bn worth of shares between 1 July and 30 September this year, while selling around $5.3bn.

One of the world’s wealthiest people, Warren Buffet’s holding company owns subsidiaries covering a range of industries, including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing and retail. Berkshire Hathaway’s most recent moves include buying up stock in energy firm Occidental Petroleum [OXY], in addition to video game developer and publisher Activision Blizzard [ATVI].

Berkshire Hathaway takes Occidental stake to over 20%

Warren Buffett's stake in Occidental Petroleum reached 20.9% by the end of Q3, according to Seeking Alpha, as the Berkshire Hathaway chairman and CEO oversaw moves to buy the dip in Occidental’s share price in September, purchasing 5.99 million OXY shares in total during the month, for $350m. This latest purchase added to other recent buys into the stock: in August, Berkshire bought 6.68 million shares for $391m, as well as 6.2 million shares a month earlier for a total of $362m.

Occidental’s share price is up by an impressive 139.31% to $74.33 year-to-date as of Friday 11 November’s close. It has also climbed 35.33% since falling back to $57.88 in September.

From Q4 onwards, the company will incorporate Occidental’s earnings into its results. Berkshire also now has regulatory approval to buy up to 50% worth of the oil and gas company’s stock, reports CNBC, which has triggered conjecture that Buffett may ultimately buy the company outright.

Berkshire Hathaway is obliged to disclose full details of its latest activity and equity moves by the 14 November deadline, when large funds have to disclose their portfolio holdings as at the end of Q3.

Looking back to the second quarter, Berkshire also took steps to up its stake in Activision Blizzard, whose CEO Bobby Kotick expects its takeover by Microsoft [MSFT] to complete by June 2023, subject to regulatory approval. Activision’s share price is up 9.84% so far this year, and gained 3.66% last week to $74.14, after broker Raymond James upgraded the video gamer’s outlook to ‘outperform’, even though the stock is trading at a significant discount compared with Microsoft’s $95-per-share offer.

Buffett’s strategy sees Berkshire Hathaway outperform market 

Warren Buffet’s Berkshire Hathaway has invested billions of dollars on stocks in 2022, buying into the likes of Citigroup [C], HP [HPQ], and Chevron [CVX], as well as Occidental and Activision, among others. Buffett’s company has also sealed a deal for insurer and toy manufacturer Alleghany, for $11.6bn – the legendary investor’s biggest deal since 2016, according to CNBC.

Buffett famously sat on his hands while markets plunged and then rallied aggressively during the pandemic, saying the market was “almost totally a casino as it skyrocketed”, reported the Financial Times. Instead, he bought back into Berkshire Hathaway's own stock – by the end of 2021, Berkshire had accumulated $146.7bn in cash.

This strategy set up Buffett and Berkshire to invest in undervalued stocks, as markets sank amid the Russia-Ukraine war, a soaring inflation rate, and the US Federal Reserve’s monetary policy pivot, as it began hiking interest rates. In Q1 this year, Buffett saw the opportunity to get back into the market, as Berkshire Hathaway purchased some $51.1bn worth of US stocks, according to the FT.

Berkshire Hathaway’s share price has comfortably outperformed the broader market in 2022. The class A BRK.A stock is up 4.08% year-to-date, compared with a decline of 16.22% in the benchmark S&P 500 index. And following Berkshire Hathaway’s Q3 results, which showed earnings up 20% year-on-year, the shares jumped 8.58% last week.