What Warren Buffett’s $51 Billion Spending Spree Means for You
Soon after he bought it, he realized he’d made a mistake…
In May 1965, Buffett Partnership Limited — Warren Buffett’s investing firm — took full control of Berkshire Hathaway.
Berkshire was a producer of cotton textiles and in a declining industry.
So, Buffett went to work transforming an aging textile mill into a holding company.
Today, Berkshire has a $700 billion market cap and is one of the most profitable companies in the world.
Over the past 57 years, Buffett increased Berkshire’s per-share market value at double the returns of the S&P 500 Index.
No other investor has even come close. And that’s why he’s a legend…
A Legend’s Letter
Buffett’s annual letter to Berkshire shareholders is read, studied and analyzed by investors.
Because what the “Oracle of Omaha” says can impact financial markets around the world.
In his letter, he provides information about Berkshire in the way he’d want to see it if he were an absentee owner.
And on February 26, 2022, he sent out this highly-anticipated letter to shareholders.
In the letter, Buffett lamented about his high-cash position, which was more than $144 billion at the time.
He said it was a consequence of his failure to find suitable investments.
He couldn’t find entire companies or stocks that met his criteria for a long-term holding.
But a few weeks later, he found opportunities and invested $51 billion.
What changed in only a few weeks?
The Price Is Right
The stock market began selling off.
And while most investors were hiding under their desks or selling stocks, Buffett was buying.
Because when opportunities arise, he doesn’t procrastinate.
Here are a few positions Buffett bought during the first quarter:
- Alleghany (NYSE: Y) for $11.6 billion.
- HP Inc. (NYSE: HPQ) for $4.2 billion.
- Chevron (NYSE: CHV) for $21.5 billion.
This was Buffett’s biggest quarterly buying spree since 2008.
He was seeing the same things as investors: inflation, rate hikes and geopolitical events.
Yet he bought because stock prices were lower!
That’s the exact opposite of what most investors were doing…
It’s during down markets when investors panic and stock prices fall.
And that’s when investors should be buying, not selling.
You don’t need to know how geopolitical events will be settled, high interest rates will rise or where inflation is headed.
There’s only one thing you need to know: Is the stock price trading significantly lower than the worth of the underlying business?
If it is, then buy shares. Nothing more complicated than that.
Right now, there are several stocks already in the Alpha Investor portfolio that are good buys.
In fact, some are even better buys than when we added them! That’s because their stock prices were slashed due to Mr. Market’s doom and gloom outlook.
If you haven’t joined us yet, now’s the perfect time.
Another stock that Buffett bought this quarter is already in the Alpha Investor portfolio — and it’s still trading at an attractive price today. Find out how to get all the details on it by joining us here.
Founder, Alpha Investor