Warren Buffett and Berkshire could invest $33 billion in less than 18 months
- Warren Buffett’s Berkshire Hathaway could invest more than $33 billion in less than 18 months.
- Berkshire recently invested in Occidental Petroleum and HP, and struck a deal to acquire the Ghanaian company.
- Buffett could also raise ownership of its own power unit and Pilot Flying J.
Warren Buffett’s Berkshire Hathaway is on track to invest more than $33 billion within 18 months.
This year, the famous investor company invested about $ 7 billion in shares of Occidental Petroleum in 11 days, and acquired $4 billion in HP stock. Buffett also struck a deal to acquire Ghanaian for $11.6 billion in less than two weeks.
James Shanahan, chief equity analyst at Edward Jones, expects two more deals to materialize over the next year. Berkshire will likely spend about $4 billion to raise its ownership of Pilot Flying J to 80% in early 2023, he told Insider.
Moreover, Buffett’s company may soon buy an 8% stake in Berkshire Hathaway Energy, owned by the family of Walter Scott Jr., a Berkshire manager until his death last September. Shanahan said that would raise its ownership to more than 99%.
If Berkshire spent $33 billion, that would exceed the $30 billion it accumulated in stocks in 2020, and dwarf the $8 billion it invested in stocks last year (ignoring stock sales in both years).
It will also exceed the $25 billion it spent on stock buybacks in 2020, and the $27 billion it spent on stock buybacks last year.
Regardless, Berkshire may still be struggling to make a negative impact on its cash pile. Shanahan told Insider that the company generates about $33 billion in free cash flow every five quarters.
“There is a good chance that Berkshire will still have $150 billion in cash by mid-2023, unless there are additional investments,” he said.
Berkshire shares are up 14% this year, reversing the S&P 500’s 8% decline over the same period. Shanahan downgraded the stock to a “pending” rating this week, confirming that its current price already reflects its potential to outperform its financial services peers this year, recent strong earnings, and an outburst of buying.
The group owns dozens of companies including Geico, See’s Candies and Burlington Northern Railway. It also owns multi-billion dollar stakes in Apple, Coca-Cola, Kraft Heinz and other public companies.
Buffett, nicknamed the “Sage of Omaha,” is expected to answer questions for several hours at Berkshire’s annual shareholder meeting in his hometown next week. The billionaire investor described the event as a “very important meeting”.