There are many good reasons to pay attention to every investment decision Warren Buffett makes.
In addition to being chairman and CEO of the eighth-largest public company in the world, Buffett has an impressive track record as an investor. Since he took control of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) in 1965, he increased the company’s value, including its investments, by a compound annual growth rate of 19.8%. This compares to the 10.2% compound total return of S&P500 index during this period. Anyone investing in Berkshire instead of an average S&P 500 fund would have 140 times their wealth today.
In recent years, Buffett has had difficulty finding a good company to buy. As Berkshire Hathaway grows, its operations generate more cash, and Buffett saw the company’s cash flow grow faster than he could find good investments. Its largest investment last year was $9.2 billion, while the company ended the year with $167.6 billion.
It’s a safe bet that Buffett will continue to acquire shares of the company this year, as he considers them to be undervalued in the current market.
Buffett’s biggest investment last year
As mentioned, Buffett hasn’t seen much positive in the stock market over the past year, so his new investments have been few and far between.
One stock he has consistently added in 2023 and continues to buy in 2024 is Western oil (NYSE: OXY). The company has a strong position in the Permian Basin, giving it access to some of the lowest-cost oil supplies in the country. Berkshire Hathaway first invested in Occidental with the purchase of $10 billion in preferred stock in 2019 to support the oil company’s purchase of Anadarko. Buffett has since taken a massive 28% stake in the company through his common stock, more than offsetting Occidental’s withdrawal of its preferred stock over the past year. Yet Buffett’s Western purchases in 2023 totaled only about $3 billion.
There is also another company that Buffett acquired a significant stake in last year. However, we still don’t know exactly what it is. While Berkshire Hathaway is generally required to disclose every position in its portfolio at the end of each quarter, it received a special exemption from the SEC for the final two quarters of 2023. As a result, we don’t know exactly what Buffett bought. .
But we have some clues. First, the company appears to be a financial value, based on Berkshire Hathaway’s reported cost basis for “banking, insurance and financial” stocks. Second, Berkshire’s financial disclosures indicate that it has more than $5 billion invested in the stock in 2023. This means that the company must be very large, given that Berkshire is required to disclose the company after acquired a 5% stake in the company. My colleague Sean Williams narrowed the field down to just seven potential candidateshis best guess being Mitsubishi UFJ Financial Group. Since Berkshire requested the position for…
