Warren Buffett, the legendary US investor, just celebrated his 90th birthday. The chief executive and chairman of Berkshire Hathaway marked the occasion with the announcement of a landmark Japanese investment.
The move demonstrates how Berkshire Hathaway has kept an eye on potential opportunities during the Covid-19 crisis.
Cathy Seifert, an analyst with CFRA Research, said recent changes to the Berkshire Hathaway portfolio reflect a more “dynamic approach to portfolio management”.
Berkshire Hathaway has invested $6bn in five of Japan’s biggest trading companies — Mitsubish, Mitsui, Sumitomo, Itochu and Marubeni. But the investments hardly made a dent in the $146.6bn in cash Berkshire was sitting on at the end of the second quarter.
These are some of the other investment calls the so-called Sage of Omaha has made during the pandemic.
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Barrick Gold
The second quarter saw Berkshire Hathaway invest in Barrick Gold, a Canada-based mining company that produces gold and copper. The investment was ahead of the recent rally in the price of gold, which peaked at a record $2,075 an ounce in August.
The investment raised some eyebrows, as Buffett has previously steered clear of gold arguing it does not produce the same attractive returns as company shares.
Barrick Gold shares rose by more than 7% on the back of Buffett’s investment. The company’s stock price has risen by more than 85% since the end of March.
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“The Barrick Gold investment [is] an interesting and relatively low-cost portfolio hedge – perhaps against some of the higher beta stocks [such as Apple] recently added to the portfolio,” said Seifert.
Dominion Energy
In July, Berkshire Hathaway’s energy subsidiary, acquired Dominion Energy’s natural gas transmission and storage business in a deal worth close to $10bn.
In addition, Buffett acquired a 25% stake in Cove Point, a liquefied natural gas import and storage facility in Maryland. Once the deal is complete, Berkshire Hathaway Energy will operate the Cove Point facility, which is one of only six liquefied natural gas export points in the US.
“The Dominion energy transaction was perhaps one of the more strategically precise deals Berkshire has recently made,” said Seifert.
“[It is] one of the few ‘bolt-on’ deals that can be combined with existing businesses and a significant departure from several other deals, like Occidental Petroleum Corp and Kraft Heniz that have not progressed as well.”
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Trimmed exposure to US banks
In recent months Berkshire Hathaway has slashed its exposure to US banks, notably JPMorgan Chase, in which it sold $3bn of its holding.
Investments in Wells Fargo and BNY Mellon were also trimmed back, while the fund offloaded its remaining stake in Goldman Sachs.
But Buffett is not shirking banks completely. Berkshire Hathaway still owns a significant chunk of Bank of America stock, worth more than $26bn.
Selling out of airlines
Airline stocks have been among some of the worst-hit during the pandemic. “The airline business has the problem that if the business comes back 70% or 80%, the aircraft don’t disappear,” Buffett told investors during Berkshire Hathaway’s annual general meeting in May.
“The world changed for airlines,” he added.
Berkshire Hathaway sold its entire stake in United Airlines, American Airlines, Delta Air Lines and Southwest Airlines, accounting for the vast chunk of the $6.5bn worth of stock the portfolio offloaded in April.
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