Berkshire Hathaway’s regulatory filings have revealed that the company has been pumping money into three prominent stocks – Activision Blizzard, Occidental Petroleum, and Chevron.
Although the company also increased its stake in numerous other companies, these three stand out because of their prominence in the Berkshire Hathaway portfolio.
Berkshire Hathaway is a holding company based in Omaha, Nebraska, and is best known for its association with Warren Buffett.
Buffett is the chairman and CEO of Berkshire Hathaway and is one of the most successful investors in history.
He has been the largest shareholder of Berkshire Hathaway since 1970 and is affectionately known as the “Oracle of Omaha”.
His tremendous success means his investments are closely followed by analysts, fund managers, and retail investors.
Regulatory filings with the U.S. Securities and Exchange Commission provide insights into which shares Buffett’s Berkshire Hathaway is buying and selling.
The company has a large portfolio, but its biggest holdings make it easy to see where Buffett is putting most of its money.
Over the last quarter, Berkshire Hathaway invested heavily in Activision Blizzard, Occidental Petroleum, and Chevron.
Activision Blizzard is a merger arbitrage bet that the company sees as a short-term opportunity if a deal with Microsoft materialises.
Occidental Petroleum and Chevron are two oil giants which are not typical companies you would expect in Buffett’s portfolio.
He is not known for betting on commodity price moves, which means Berkshire Hathaway most likely sees these companies as undervalued.
The two oil companies trade at low price-to-earnings ratios (P/E ratios) compared to the industry, which is a core part of spotting a value stock.
With buybacks and dividends happening at Occidental Petroleum and Chevron, it is easy to see why it carries favour with Buffett.
Here are the three big companies Berkshire Hathaway has pumped money into over the last few months.
Berkshire Hathaway has increased its stake in Activision Blizzard. It is betting that Microsoft’s planned acquisition of the video game company will go ahead.
In January, Microsoft announced that it was planning to buy Activision Blizzard for $95 per share. Curiously, the share price did not increase close to the acquisition price.
The share is currently trading at around $80, which provides a good arbitrage opportunity if the deal is closed.
Over the last year, Berkshire Hathaway has consistently increased its stake in Occidental Petroleum. After its most recent buying spree, the company now owns more than 20% of the company.
Berkshire Hathaway recently received regulatory approval to purchase up to 50% of Occidental Petroleum. Shares jumped on the news, increasing the gains this year to over 140%.
Occidental Petroleum announced a new shareholder return framework and debt reduction targets, which will make investors happy.
Berkshire Hathaway has increased its stake in Chevron, which now makes up around 7.8% of the company’s portfolio.
It is a big bet from Berkshire Hathaway on oil, which is uncharacteristic for Buffett, who does not favour commodity-based companies.
Its investment in Chevron indicates that they see value in the company rather than betting on the oil price rise.