Billionaire Warren Buffett is one of two people among the world’s ten richest people who have seen his net worth rise since January, according to the Bloomberg Billionaires Index.
Berkshire Hathaway CEO ((BRK.A) – Get a Berkshire Hathaway Inc. report. First-class, fifth on the index, a daily ranking of the world’s richest people. His total net worth is $112 billion and he has earned $2.62 billion to date as of the end of trading on May 12.
The only other billionaire in Bloomberg’s top ten list is Gautam Adani, an Indian infrastructure tycoon who owns real estate, goods, power generation and transmission, who has a total net worth of $102 billion and his performance to date is profit. $25.5 billion.
Of the 100 richest people, only 24 billionaires have seen a rise in their net worth in the year-to-date to end of trading on May 12.
Buffett’s Berscher Hathaway has allocated $7 billion to oil producer Occidental (((OXY) – Get the Occidental Petroleum report), increasing its share to more than 14%. The conglomerate also added to Chevron ((CVX) – Get the report of the Chevron Corporation) who jumped on investing in the four largest holdings of common stock in Berkshire. Chevron is now the fourth largest company it owns. The conglomerate spent about $41 billion in net purchases during the first quarter.
Energy stocks rebounded from their 2020 dip when the economy stalled. Occidental stock is up 100.38% over the past six months and 155.30% in the past year in response to the reopening. Chevron’s rebound was smaller, but the stock has gained 43.7% over the past six months and 53.35% in the past year.
Buffett’s investment style stays on track
While his critics focus on companies that Buffett should have invested in earlier, such as Apple ( (AAPL) – Get the Apple Inc. report.Robert Johnson, a professor of finance at Creighton University, told TheStreet that because of his dislike of owning technology stocks and his blunders in airline stocks, the 91-year-old has maintained his investment strategy of buying high-quality companies.
“A lot of their business is those stable, unfamiliar companies that are constantly producing cash flows and aren’t valued at market multiples,” he said. “People often want to try to change their investing style to fit the market. Buffett is the true North. He just doesn’t.”
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Stocks that have lost billions of dollars in market capitalization lately have been those based on future earnings or narrative stocks like Coinbase ( (Currency) Johnson said) with “questionable business models and weak fundamentals.”
Since Buffett “doesn’t operate at this end of the market,” he said, his company benefits when “there is an orientation towards quality.”
The group owns countless companies from smaller stakes to outright holdings ranging from railroad, insurance and utilities to technology companies and notorious holdings like Coca-Cola (((KO) – Get Coca-Cola Company Report), Kraft Heinz ((KHC) – Get Kraft Heinz’s report and See’s candy.
“The more value-oriented companies may fall in value at some point, but they will hold their value better than the highly speculative companies,” Johnson said.
Berkshire’s strategy also included maintaining a significant amount of free cash flow. The billionaire reiterated the cash stock situation and said his company could do “better than banks” in providing lines of credit to companies at the annual shareholder meeting in May.
Buffett sold shares of Wells Fargo ((WFC) – Get Wells Fargo & Company report), JPMorgan Chase ((JPM) – Get a report by JPMorgan Chase & Co.) and Goldman Sachs ((p) – Get Goldman Sachs Group, Inc.’s report for the past two years and has instead prioritized the ownership of retail banks, while retaining its stakes in Bank of America ((buck) – Get the Bank of America Corp report), its second largest after Apple ((AAPL) – Get the report of Apple Inc.) and USBancorp ((USB) – Get the US Bancorp report).
Berkshire has benefited from the volatility in the market. Buffett said the group spent $41 billion in stocks during the first quarter and paid for it with cash flow.
“That’s why markets do crazy things, and sometimes Berkshire gets a chance to do something,” Buffett said.