Warren Buffett’s company, Berkshire Hathaway (NYSE:BRK-B), filed its 13F last night. This is a report of a company’s investment portfolio as of the end of the previous quarter. I think that it can also help me get an insight into how someone is thinking about stocks, markets, and investing. So what has Warren Buffett been buying? And what does this tell me about his thoughts on investing?
Overview
Between October and December 2021, Berkshire Hathaway added to its investments in oil major Chevron, hard flooring retailer Floor & Decor Holdings, high-end furnishing company RH, and media conglomerate Liberty Sirius XM. It also made new investments in computer game developer Activision Blizzard, Brazilian bank Nu Holdings, and media conglomerate Liberty Media Formula One.
I view some of these as more significant than others. Berkshire’s investment in Nu Holdings was known before, so it is not a surprise that it now appears on Berkshire’s 13F following the company’s IPO. I also don’t think that the company’s investment into Liberty Sirius XM is particularly significant, since it effectively replaces a position in Sirius XM Holdings. I see the investments into Chevron and Activision Blizzard as the most significant.
Chevron
Warren Buffett added 33% to Berkshire’s investment in Chevron, making the oil major Berkshire’s ninth-largest holding. I think this is significant because Chevron’s share price performed well towards the end of 2021. Nonetheless, Buffett continued to view Chevron stock as a buy even as the price increased. This is interesting to me. I think this indicates that Buffett is clearly optimistic on the long-term future for oil and gas.
Watching Buffett building Berkshire’s stake in Chevron has been interesting to me. Buffett began buying Chevron shares (along with shares in Verizon) at the end of 2020. At the time, he sought permission to keep Berkshire’s interest in the company private, to avoid drawing attention to the investment. I think this indicates that Buffett views Chevron as one of the more important investments in Berkshire Hathaway’s portfolio.
Activision Blizzard
I also find Berkshire’s investment in game developer Activision Blizzard interesting. Unlike Chevron, I don’t think that Buffett personally made the investment into Activision. I take the view that it is more likely that the investment was made by Todd Combs, one of the capital allocators at Berkshire, with Buffett’s support. I therefore don’t believe that the Activision investment tells me much about Buffett’s thinking specifically.
The reason I see the Activision Blizzard investment as interesting is that it was made before Activision’s deal to be acquired by Microsoft was announced in January. While I doubt that the possibility of Microsoft acquiring the company was part of Berkshire’s investment thesis, I do think it likely that Berkshire will have benefited significantly from the resulting jump.
Conclusion
Berkshire’s 13F tells me a lot about what the company has been buying. But what stands out to me the most is that Warren Buffett is still highly selective about his investments. With around $160bn in cash available, Buffett decided to keep most of it on the sidelines. I view this as a clear indication that Buffett does not see substantial opportunities in the stock market right now. And this, I think, makes the investments that he did make at the end of last year all the more significant.
Stephen Wright owns Berkshire Hathaway (B Shares) and Verizon shares. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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