The famed investor’s company cut its stake in Taiwan Semiconductor — which it only established in the third quarter of last year — by 86% to 8.3 million shares. The disposals fueled a slump in the value of the holding from $4.1 billion to about $618 million in the three months to December 31.
Warren Buffett’s luck changed this year, allowing him to spend a record sum on stocks and end his deal drought. Here are his 6 highlights of 2022.
Warren Buffett spent a record sum on stocks and made a major acquisition in 2022.
The Berkshire Hathaway CEO tore into bitcoin, adjusted some overseas bets, and gave a surprise gift.
Here are the investing icon’s 6 highlights of 2022.
Warren Buffett’s luck changed in 2022. After years of battling to find bargains and watching Berkshire Hathaway‘s cash stack up, the famed investor seized his chance to put his conglomerate’s mountain of money to work.
Buffett spent a record sum on stocks, executed a major acquisition, and made some striking changes to his overseas bets. He also crowed about four of Berkshire’s key holdings in his yearly letter, trashed bitcoin at the annual shareholders’ meeting, and made a surprise donation to his children’s charities.
Here are Buffett’s 6 highlights from 2022:
The annual letter
Buffett published his famous annual letter to Berkshire shareholders in February.
The investor vented his frustration with Berkshire’s mammoth $144 billion cash pile, blaming a lack of bargains in the stock market. He also celebrated the “Four Giants” among Berkshire’s businesses: insurance, railroads, energy, and its enormous Apple stake.
Moreover, Buffett appeared to respond to criticism of his tax practices by noting Berkshire paid $3.3 billion of federal income tax in 2021 — nearly 1% of all the corporate income taxes collected by the US government that year.
Buffett struck a deal to buy Alleghany for nearly $12 billion in March. Berkshire completed its takeover of the insurer in October, ending a years-long drought on the acquisition front.
The investor showcased his trademark approach to dealmaking, which prizes trust and simplicity. He proposed the merger over dinner with Alleghany’s CEO, who previously ran a Berkshire subsidiary, and the pair formally announced a deal less than two weeks later.
Buffet also refused to budge on the deal terms, and when Alleghany enlisted Goldman Sachs as a financial advisor, he insisted the investment bank’s fee was subtracted from Berkshire’s offer price.
An epic buying spree
Berkshire plowed a net $41 billion into stocks in the first quarter of 2022, setting a new record for its quarterly spending on equities.
Buffett and his team built large stakes in HP, Chevron, Occidental Petroleum, Citigroup, Paramount, and Taiwan Semiconductor in the first nine months of 2022. Berkshire also spent over $5 billion on buybacks and made other sizeable purchases, lifting its spending on stocks and acquisitions for the year to an astounding $70 billion or so.
The annual meeting
Buffett hosted Berkshire’s annual shareholder meeting in his hometown of Omaha, Nebraska in April, after two years of virtual gatherings due to the pandemic.
The investor called out the reckless speculation in the stock market, underlined the grave threat posed by inflation, and declared he wouldn’t pay $25 for all the bitcoin in the world.
Buffett made some big moves in 2022 that deserve special attention. For example, he poured a total of about $30 billion into Chevron and Occidental, propelling the pair of oil-and-gas companies onto the list of Berkshire’s most-valuable holdings.
The investor and his team also revealed in November they had boosted their billion-dollar bets on Japan’s five largest trading houses.
In contrast, they sold BYD shares for the first time in 14 years. Berkshire has now slashed its position in the Chinese electric-vehicle maker by around 22%, and pocketed an estimated $1.2 billion profit from the disposals.
An unexpected gift
Buffett made his usual annual donation of Berkshire stock in June, dividing the $4 billion gift between the Bill & Melinda Gates Foundation and four of his family’s charities.
Unexpectedly, he contributed a further $759 million worth of Berkshire stock to his three children’s foundations for Thanksgiving, saying he was proud of their charitable work and wanted to show his appreciation.
7/7 SLIDES
Buffett’s conglomerate also pared its US Bancorp stake by 91% to fewer than 7 million shares, worth just under $300 million at the end of December. Similarly, it sliced its BNY Mellon position by about 60% to 25 million shares, worth $1.1 billion at year end.
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Less drastically, it trimmed its Activision Blizzard holding by around 12% to 53 million shares, valued at about $1.5 billion at the end of last year.
Berkshire didn’t add any new names to its US stock portfolio last quarter, nor did it eliminate any holdings. But the company made several notable tweaks. For example, it trimmed its Chevron and Ally Financial wagers, and bolstered its Paramount Global stake.
Moreover, Berkshire’s listed Apple holding swelled by about 334,000 shares to 895 million shares, as Buffett’s company acquired Alleghany and took ownership of the insurer’s shares of the iPhone maker in the period.
Berkshire’s overall Apple stake, which includes around 20 million shares held by its New England Asset Management subsidiary, stood at 916 million shares or 5.8% of the company at the end of December. The position was worth over $140 billion as of Tuesday’s close, making it easily the most valuable holding in Berkshire’s portfolio.
Despite the disposals in the period, the value of Berkshire’s portfolio grew by about $3 billion to $299 billion. Berkshire will disclose how much it spent buying stocks and made selling them last quarter, plus how much its cash pile grew and how much it spent on buybacks, in the coming days.
Buffett and his team struggled to find cheap stocks, strike deals, or justify repurchasing Berkshire’s shares during the stock market’s pandemic boom. However, their luck changed in 2022, allowing them to build massive positions in companies such as Chevron and Occidental Petroleum, acquire insurer Alleghany, and bolster their share buybacks.
Buffett’s company owns scores of businesses including See’s Candies, Geico, and the BNSF Railway. It also holds multibillion-dollar stakes in public companies such as American Express, Coca-Cola, and Kraft Heinz.
