Billionaire Warren Buffet is one of two of the world’s 10 richest people to have seen his net worth increase since January, according to the Bloomberg Billionaires Index.
The CEO of Berkshire Hathaway ( (BRK.A) – Get Berkshire Hathaway Inc. Class A Report, is ranked number five on the Index, which is a daily ranking of the richest people in the world. His total net worth is $112 billion and he has earned $2.62 billion from the start of the year to the end of trading on May 12.
The only other billionaire in Bloomberg’s top 10 list is Gautam Adani, an Indian infrastructure tycoon who owns real estate, commodities and power generation and transmission, whose total net worth is $102 billion and its year-to-date performance is a profit. of $25.5 billion.
Of the 100 richest people, only 24 billionaires saw their net worth increase from the start of the year until the end of transactions on May 12.
Buffett’s Berskhire Hathaway allocated $7 billion to oil producer Occidental ( (OXY) – Get Occidental Petroleum Corporation Report), bringing its stake to more than 14%. The conglomerate also added to its Chevron ( (CLC) – Get Chevron Corporation Report) stake that propelled the investment in Berkshire’s top four common stocks. Chevron is now its fourth main position. The conglomerate spent about $41 billion in net purchases during the first quarter.
Energy stocks rebounded from their decline in 2020 during the shutdown of the economy. Shares of Occidental have risen 100.38% over the past six months and 155.30% over the past year in reaction to the reopenings. Chevron’s recovery has been weaker, but the stock has gained 43.7% over the past six months and 53.35% over the past year.
Buffett’s investment style stays the course
While his detractors focus on companies that Buffett should have invested in earlier, like Apple ( (AAPL) – Get the Apple Inc.) because of his aversion to tech stocks and his blunders with airline stocks, the 91-year-old maintained his investment strategy of buying quality companies, professor Robert Johnson told TheStreet. in finance at Creighton University.
“A lot of their businesses are these stable, unsexy companies that consistently produce cash flow and aren’t valued at multiples above the market,” he said. “Too often people want to try and change their investing style to fit the market. Buffett is true north. He doesn’t do that.”
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Stocks that recently lost billions of dollars in market capitalization were those based on future earnings or narrative stocks like Coinbase ( (PIECE OF MONEY) ) with “dodgy business models and poor fundamentals,” Johnson said.
Since Buffett “doesn’t operate in that end of the market,” his business benefits when there’s “a flight to quality,” he said.
The conglomerate owns a myriad of businesses ranging from small holdings to outright holdings ranging from railroads, insurance, utilities to technology companies and its infamous holdings such as Coca-Cola ( (KO) – Get Coca-Cola Company Report), Kraft Heinz ( (DIFFERENT) – Get the report from Kraft Heinz) and See’s Candies.
“Companies that are more value-oriented may lose value at some point, but they will hold their value better than highly speculative companies,” Johnson said.
Berkshire’s strategy also included maintaining a large amount of cash on hand. The billionaire reiterated that cash reserve stance and said his company could do “better than the banks” by providing corporate credit lines at their annual shareholders meeting in May.
Buffett sold shares of Wells Fargo ( (WFC) – Get Wells Fargo & Company), JPMorgan Chase ( (JPM) – Get the JPMorgan Chase & Co.) and Goldman Sachs report ( (GS) – Get Goldman Sachs Group, Inc. Report) over the past two years and has instead prioritized retail bank ownership, keeping its shares of Bank of America (BAC) – Get Bank of America Corp Report), its second largest position after Apple ( (AAPL) – Get the report Apple Inc.) and USBancorp ( (USB) – Get the US Bancorp report).
Berkshire took advantage of market volatility. Buffett said the conglomerate spent $41 billion on stocks in the first quarter and paid for it through treasury.
“That’s why the markets do crazy things, and sometimes Berkshire has a chance to do something,” Buffett said.