Daily Brief: Buffett’s Berkshire Hathaway Suddenly Has An Insatiable Appetite For Stocks

Daily Brief: Buffett’s Berkshire Hathaway Suddenly Has An Insatiable Appetite For Stocks

almost 2 years ago3 mins

Mentioned in story

Warren Buffett’s Berkshire Hathaway announced over the weekend that it bought a smorgasbord of stocks last quarter – the most since 2008.

What does this mean?

Berkshire has been selling off stocks for the last two years, arguing that US companies are so overvalued that returns from any new investments would be few and far between. The conglomerate was so stock averse, in fact, that its pile of idle cash hit the princely sum of $147 billion by the end of 2021. But that was before war, a Chinese slowdown, and out-of-control inflation brought some stocks down to more reasonable prices.

Berkshire stock
Source: The Wall Street Journal

That shift encouraged Berkshire to buy into insurer Alleghany and PC maker HP in March and April respectively. And now, it’s revealed that it also upped its stake in oil giant Chevron by over $20 billion last quarter, while at the same time becoming gaming company Activision Blizzard’s biggest shareholder. All in all, it plowed over $51 billion into stocks last quarter, reducing Berkshire’s cash pile to its smallest since 2018.

Berkshire cash

Why should I care?

Zooming in: Buffett chooses oil.

Between its stakes in Chevron and Occidental Petroleum, Berkshire now has more than $40 billion invested in the oil industry. That probably has something to do with the booming profits energy companies are making from sky-high oil prices, as well as the potential for them to climb even higher if the European Union ends up banning Russian imports altogether.

For you personally: How to beat inflation, Buffett-style.

If you’re worried about inflation, Buffett had a piece of advice: brush up on your professional skills, whatever they might be. Whether you’re a pro at writing, tracing, or training doves to spell rude words in the sky, Buffett said vendable skills “will remain in demand no matter what the dollar is worth”. And failing that, he said, invest in businesses whose products are in demand no matter what – citing his Coca-Cola holding as a prime example.

Keep reading for our next story...

Pfizer Reported Better-Than-Expected Quarterly Results

Pfizer image

Pfizer reported better-than-expected quarterly results on Tuesday, as the pharma company continues to take a principled stand against Big Hesitancy.

What does this mean?

Love ‘em or hate ‘em, Pfizer’s anti-Covid treatments were still going strong last quarter. The vaccine the company co-produces with BioNTech – the most-used shot in Europe and the US – made $13 billion in sales last quarter, as the rollout of boosters and the approval of shots for children kept demand high. Paxlovid – the company’s dedicated antiviral pill – chipped in too, bringing in a tidy $1.5 billion. And since together they make up more than half of the pharma giant’s revenue, its total revenue came in a better-than-expected 77% higher than the same time last year. There was one snag, mind you: Pfizer cut its profit outlook as it warned about higher research and development costs to come.

Pfizer stock
Source: Google Finance

Why should I care?

The bigger picture: Vaccines lose their effectiveness.

There are signs that demand for vaccines is slowing down: data out last month showed that less than half the number of shots were given in mid-March than in the first week of January. This, as people in rich countries become increasingly reluctant to take repeated booster shots, and as those in poorer countries opt not to take one in the first place. That might be why health data analytics group Airfinity is now expecting a third fewer vaccines to be sold globally this year than it previously thought.

Vaccines fall

Zooming out: Pfizer diversifies its portfolio.

Analysts reckon that this slowdown could be a sign that the influx of post-Covid cash for vaccine producers is coming to an end. So it’s a good thing Pfizer’s already making efforts to push into new areas: it took over Arena Pharmaceuticals in December, and it announced last month that it would be buying respiratory drug maker ReViral to boost its drug portfolio.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG