Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Warren Buffett's $24 Billion Bet on the U.S. Stock Market

Companies / Investing 2011 Nov 08, 2011 - 07:06 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleKerri Shannon writes: Investing legend Warren Buffett must be feeling good about the U.S. market and economic outlook - he's bet $24 billion on them.

Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) invested $23.9 billion in this year's third quarter, the most in at least 15 years.

The company bought almost $7 billion in stock last quarter, a 90% jump from the $3.62 billion in the second quarter and a staggering 739% increase from the $834 million purchased in the first.

The $23.9 billion also included the $9 billion acquisition of specialty chemical company Lubrizol Corp., finalized in September, and $5 billion in preferred shares and warrants in Bank of America Corp. (NYSE: BAC).

These billion-dollar investments by the "Oracle of Omaha" are another move signaling his bullish outlook on the U.S. market. He's said repeatedly the United States won't see a double-dip recession - and he's putting huge money behind that forecast.

"He sees something, and it's big," Thomas Russo, a partner at investment management firm Gardner, Russo & Gardner, told Bloomberg.

Where Buffett Placed His Bets
Buffett and Berkshire's investments broadened the company's portfolio beyond its financial and consumer-related investment focus.

A Berkshire financial filing showed a $46 billion cost basis in the company's equity investments as of Sept. 30: About $15.9 billion in "banks, insurance and finance," $12.5 billion in "consumer products," and the remaining $17.4 billion in "commercial, industrial and other."

That's a 168% rise in the "commercial, industrial and other" category from Dec. 31, 2010 when such investments totaled only about $6.5 billion, and a 62% increase from 2011's second quarter.

"He's broadly diversifying across numerous industries, and he would perhaps want that to be part of his legacy," David Kass, a professor at the University of Maryland's Robert H. Smith School of Business, told Bloomberg. The recent spending "sounds like at least one major investment. And it wouldn't surprise me if it were two or three."

Berkshire hasn't yet filed its stock statement for the third quarter, and individual companies might not be listed when it does. The company requested permission to omit information from filings that show U.S. equity holdings as of March 31 and June 30, which is occasionally permitted by regulators to prevent copycat investing.

Berkshire likely added to current holdings in the familiar financial and consumer-product industries, which it also increased in the second quarter.

Buffett disclosed in regulatory filings for the quarter ended June 30 an 88% increase in its stake in MasterCard Inc. (NYSE: MA), and a 3% stake in its Wells Fargo & Co. (NYSE: WFC) holdings. Wells Fargo is Berkshire's second-largest portfolio holding behind The Coca-Cola Co. (NYSE: KO). Berkshire also added to its Dollar General Corp. (NYSE: DG) stock.

Todd Combs, Berkshire's portfolio manager appointed last year, is thought to be behind some of the smaller stock buys, as Buffett's purchases are usually no less than $1 billion.

"I wonder if he turned Todd Combs loose," David Rolfe, chief investment officer of Wedgewood Partners Inc., told Bloomberg. "I hope Buffett went to the movies one day and Combs got on the phone and went crazy with buy orders."

Other current holdings Berkshire could've increased last quarter are American Express Co. (NYSE: AXP), Goldman Sachs Group Inc. (NYSE: GS) and The Procter & Gamble Co. (NYSE: PG).

Berkshire's third-quarter acquisition of Lubrizol adds to its collection of businesses that include Burlington Northern Santa Fe LLC, Chinese car and battery maker BYD Co. Ltd., and an 80% stake in Israeli toolmaker Iscar Metalworking Cos.

Rumors swirled in August that Buffett may be tempted to increase his 10% stake in BYD because the company's shares have slumped 80% from their peak value. Buffett and his partner Charlie Munger have enormous respect for BYD's Chairman Wang Chuanfu, but the company's sales have been plunging dramatically. Buffett's loyalty and desire for a bargain, however, may prevail.

"If Warren Buffett still trusts doing business in China, if he does not believe they're due for a serious cleansing and difficulty, then he might be very motivated to buy the company while the stock is being pounded aggressively like it is," Bill Smead, chief investment officer of Smead Capital Management, told Reuters.

Buffett-Style Bargain Hunting
The Standard & Poor's 500 Index fell 14% as Buffett made his third-quarter investments. That made for the index's biggest quarterly decline since a 23% fall in 2008's fourth quarter. Buffett said Berkshire spent more on stocks on Aug. 8, the day the S&P 500 fell more than 6%, than any other day this year.

"We're ready to buy lots of things," Buffett told Bloomberg Television Sept. 30. "If the stock is cheap, we will buy it."

Berkshire also invested at least $18 million in itself. The company announced on Sept. 26 that it was authorizing a stock buyback for the first time in history, as long as the price was less than 1.1 times book value and it retained cash holdings of no less than $20 billion.

Buffett said he thought Berkshire's share price was extremely attractive and couldn't resist buying.

"The cheaper stocks get, the better I like to buy them, whether it's our stock or somebody else's," Buffett told CNBC in September.

Indeed, the last time Buffett invested more than $20 billion in a quarter was in 2008, when the S&P 500 posted its biggest decline since 1937.

Source :

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in