Why is Lord Buffett suddenly buying the dip?

The conglomerate of Warren Buffett, Berkshire Hathaway, wasn't exactly interested in stocks during the pandemic and openly said he thought stocks actions They were too expensive. However, now that the markets have corrected, it has been using the fall like a opportunity all with buy actions for a value of 51.000 million, the most it has spent in a single quarter since 2008. So let's take a look at why the Oracle of Omaha has suddenly decided to start buy again and what's on the shopping list.

What does Buffett know that we don't?

Let's see, he really knows more about everything than us, for a reason he is the best investor of the 20th century. He is also known for going against the grain, buying when others are selling. At the same time, purchase aggressively when Prices by companies that you like “they fall into his lap” (Buffet's expression), but remains on the sidelines when that is not the case. Since the global financial crisis, the market has seen a rapid increase by ratings by actions and a greater competition of the groups of private capital. And that translates into fewer opportunities that meet Buffett's selective criteria. So instead of buying good companies a bad prices, Berkshire has been building an impressive cash fund for investments, ready to take off when the time is right.

This year, with the Interest rate Taller and inflation weighing on the market, it seems that the factors have aligned over time. The Oracle spent almost a third of that cash fund to buy shares in the first quarter; It seems that they can finally buy algunas big enterprises to a attractive price.

So what has Buffett been buying?

If there's one sector that Buffett seems to find particularly attractive right now, it's energetic. Berkshire has increased its holdings in both Western Petroleum (OXY) as in Herringbone (CVX), which now represents his third largest position. Both are a good inflation hedge because their ingresos They directly benefit from the higher energy prices. But Chevron It also has other stellar points:

• It has an exceptional management team (something essential for Buffett)
• A high and stable dividend that has consistently increased its dividend and, unlike other oil majors, did not reduce it in 2020.
• A higher than average return on invested capital.

The fact that the company operates across the entire supply chain (it is “fully integrated”) also makes it more able to roll with the punches when there are higher extra costs or supply chain setbacks. Outside of energy, Berkshire has taken a curious and interesting position in Activision (ATVI), the video game producer behind “Call of Duty"And"World of Warcraft”. This is a pure merger arbitrage play: Microsoft agreed to buy Activision at a price of $ 95 per share, but its shares are currently trading at just $ 78. If the agreement is carried out (as expected), Buffett can generate a return of 21% from current prices, a profit of around $ 1200 millones with an investment of $ 5600 millones.

The last significant addition was HP (HPQ), with Buffett buying a stake in the 11,5% at the computer and printer manufacturer. HP it is a business mature and defensive, which pays a high dividend yield (near a 2,6% planned for next year) and benefits from stable cash flows y margins above average. Technically it's a tech stock, but it doesn't tend to move as much with the consumer spendingry could turn out to be quite resistant and economy slows down. 2

What else does the Oracle have in his portfolio?

Buffett is an investor conservative and analytical The one who likes invest in companies who have a clear advantage, what he calls a «economic moat«, about his rivals. More than him for Growth or value Above all, it places more emphasis on buy companies that are in condition de dominate their markets for decades. So it's no surprise that Berkshire's top holdings include American references , the Coca-Cola, Kraft Heinz, Bank of America y American Express. His greatest position of all, Apple , fits perfectly into the Oracle's thesis: the company has attractive margins y solid cash flows, and is aumentando his or her dividends at a rapid pace.

So how do we take advantage of this opportunity?

Buffett, now 91 years old, has never claimed to be a master of the markets or open an investment academy, but his historial shows that it is good for increase your positions when the actions are cheap and to create a cash reserve when they are overvalued. So if Buffett is buying stocks again, that suggests not all stocks are overvalued. It is also important to look at, apart from what stocks Buffett buys, when he buys them. Your preference now for resistant actions to recession y resistant to inflation, for example, shows that you are probably worried about the threat of the stagflation, the combo far from being ideal high inflation y low growth. If you want to invest like Buffett, the good news is that you can do it. Buffett tends to mantener his or her positions during several quarters or, in some cases, years. We could replicate what he does, even weeks after he does it. The previous list and four actions that we have highlighted are a good point all with Get Started. Or we could just buy Berkshire Hathaway (BRK-B), to own the same portfolio as Buffett.