As war erupted in Europe and US inflation soared, Warren Buffett of Berkshire Hathaway Inc. doubled down on his tried-and-tested strategy to deal with the fallout. He also had more negative things to say about Bitcoin.

Bitcoin Review

Warren Buffett and Charlie Munger have been constant skeptics of cryptocurrencies, with Munger calling them “harmful poison”. The couple aired their deep criticisms again on Saturday, with Buffett noting that they would rather own a lot of farmland or apartments — what they call earning assets — than bitcoin.

“What would I do with it? Buffett said. “It’s not going to do anything.”

The stock buying frenzy

The billionaire investor continued his biggest stock-buying spree in at least a decade, undeterred by geopolitical unrest and fears of runaway inflation. He and his deputies dug deeper into the U.S. stock market and expanded the conglomerate’s stakes in Chevron Corp. and Activision Blizzard Inc., even as Buffett noted “extraordinary” price increases at Berkshire businesses.

Buffett, who sat in Omaha, Nebraska, on Saturday at Berkshire’s annual meeting of shareholders, had wondered why he hadn’t taken advantage of the downturn when the pandemic took hold. Now, as war and inflation fuel market volatility, prompting the S&P 500’s worst quarter in two years, it has accelerated amid uncertainty, making $41 billion in net purchases of shares in the first quarter. This is the most in data dating back to 2008.

“As long as Buffett and his team pay reasonable prices for quality businesses, these investments should perform well in any environment – ​​inflationary or otherwise,” said Darren Pollock, a Berkshire investor who is a principal at Cheviot Value. Management LLC. They reflect “the sheer volume of cash flowing into Berkshire’s coffers as well as what we believe is becoming an increasingly evident desire to get cash out as inflation becomes more entrenched.”

Buffett said he couldn’t predict the path of inflation over the coming months or years, although he said he’s seen price increases at his businesses. He also conceded – as he has before – that his company hasn’t always timed its asset purchases well, although it has been “reasonably good at figuring out when we’re getting enough bang for our buck”.

On the home front, Berkshire ditched one of its key capital deployment levers, signaling that buyouts aren’t as attractive to the company right now. Still, the $3.2 billion in buybacks he made, coupled with his other investments, helped reduce the conglomerate’s cash position to around $106 billion — a sum that’s still above the preferred safety margin. by Buffett.

Berkshire’s stake in Chevron, which stood at nearly $4.5 billion at the end of 2021, hit $25.9 billion at the end of March, according to its first-quarter regulatory filing. Activision’s stake in the company, which is just 1.87% of the video game company’s common stock, jumped to 9.5% as Berkshire bet its deal with Microsoft Corp. would be concluded safely.

The billionaire carefully navigated through some of the most important topics of the year, if he even touched on them. Few explicit comments were made about Russia’s invasion of Ukraine, although Buffett answered a question about the risk of nuclear weapons. He gave little on Berkshire’s own succession plan. Here are some of the other key topics that were covered on Saturday:

Succession plans

Buffett confirmed last year that Greg Abel, the vice president in charge of non-insurance operations, was the best candidate to succeed him when he steps down as chief executive. Abel, alongside fellow vice president Ajit Jain, joined Buffett, 91, and longtime business partner Charlie Munger, 98, on stage for part of the reunion.

Still, Buffett has given no indication that he plans to leave his post anytime soon, and his appearance on stage has reassured some investors that he can keep up with the work.

“The level of mental acumen and the humor is still there. It’s really something,” said James Armstrong, whose Henry H. Armstrong Associates oversees Berkshire stock investments. management of the company is in good shape.”

Buffett joked that the age of top executives frankly demands a chance for investors to vet executives.

“It’s been three years and it’s much better to see real shareholders, owners, partners,” Buffett said to kick off the morning meeting. “If you’re a business owner and you have two guys – 98 and 91 – running the business, you have every right to see them in person.”

The woes of inflation

Buffett again addressed the impact of inflation, after warning shareholders last year that the economy was hot. Inflation hurts bondholders, as well as people who hide money under couches.

“It scams almost everyone,” Buffett said. “If you could really have a completely stable unit of monetary use for the next hundred years, that would be better for businesses and investors in general.”

What Bloomberg Intelligence says:

“Berkshire Hathaway’s various business units contribute to long-term earnings capability, and while supply chain challenges and inflation remain risks, the company largely ignored them in the first quarter as earnings operating companies remained at near record highs.” — Matthew Palazola, Kylie Towbin, BI analysts

Berkshire businesses have not been immune to the pressures. Dairy Queen CEO Troy Bader said in an interview on Friday that it was a real challenge. Brooks Sports Inc. CEO Jim Weber acknowledged the effects on his company, which makes running shoes, but expressed some optimism that supply issues and inflationary pressures that have weighed on the market will ease. ‘economy.

“There was such a demand bubble after Covid, people bought things at an incredible rate,” Weber said. “It’s not going to collapse, I think, but it will normalize. And when it normalizes, I think that whole capacity challenge in the supply chain will go back to normal. I think some prices may be more attractive because there is going to be overcapacity.