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Berkshire Hathaway CEO Warren Buffett has recently made big bets on Chevron and Occidental Petroleum, along with other stocks.
Drew Angerer/Getty Images
Warren Buffett sat out much of the post-Covid-19 selloff to the detriment of
Berkshire Hathaway shareholders. But in the first quarter of 2022—with stocks once again falling—the Oracle of Omaha took action, purchasing some $51 billion of equities and selling less than $10 billion. Those record quarterly purchases came as the
S&P 500
slid 5% in the first three months of the year.
While Buffett’s move could prove profitable for Berkshire (ticker:BRK.A, BRK.B) shareholders, the buys themselves aren’t really a signal of increasing bullishness on the market overall. Instead, they’re the application of Buffett’s signature value investing style and his focus on simple and easy-to-understand theses on individual stocks.
Among Berkshire’s largest buys in the first quarter were
Chevron (CVX) and
Occidental Petroleum (OXY). Those are both big oil producers, with generous cash-return plans. Buffett likes companies that buy back a lot of stock and pay big dividends. Share buybacks mean Berkshire’s ownership stake will rise over time, and dividends throw cash back to the parent company to redeploy elsewhere.
“If you do it at the right price, there’s nothing better than buying back part of your own business,” Buffett said at Berkshire’s annual shareholders meeting on Saturday.
A first-quarter surge in oil prices means lots of earnings and free cash flow to fund those shareholder-return programs at Chevron and…
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