American Investor: What Warren Buffett Excites Right Now

Status: 07.04.2022 18:02

Legendary American investor Warren Buffett had been quiet for a long time. Now the 91-year-old has stocked up on shares again on a large scale, buying them from a “Corona winner”.

By Angela Göpfert,

Warren Buffett has a legendary reputation among investors. Attending the annual general meeting of his US investment firm Berkshire Hathaway, based in Omaha, Nebraska, is a pilgrimage and a personal rebirth for some. Many try to understand the financial movements of the senior investor in their own stock portfolios.

But in recent years, Buffett’s imitators have had little to do. The “Oracle of Omaha” practiced withdrawal buying for a full six years and did not make any major acquisitions.

HP shares are in high demand following Buffett’s addition

But now the 91-year-old apparently senses opportunity in the stock market again. After announcing plans to acquire insurance conglomerate Alleghany and oil company Occidental Petroleum, Buffett has now identified and signed a buyout opportunity in laptop and printer maker HP. Buffett is investing $4.2 billion in HP, according to a statement from the US Securities and Exchange Commission; in this way he secures more than eleven percent of all HP shares.

The star investor is thus taking a sharp turn. As recently as February 26, in his annual letter to Berkshire Hathaway shareholders, he complained that he and his right-hand man, Charlie Munger, found little in the stock markets to excite them. The response to his new acquisitions is now stronger in the markets. HP shares are up 13 percent in US premarket trading today. HP prices are also increasing in Frankfurt.

Cheap purchase opportunity?

But what does Buffett find so good about his new acquisition, HP? In fact, the shares of the laptop and printer manufacturer were among the big “Corona winners”. But like other tech stocks, HP stocks have come under pressure recently. For the current year, a minus of more than seven percent has been recorded so far.

That opened up a buying opportunity for Buffett that he seemed reluctant to pass up. Because the company is still doing well. HP recently presented strong balance sheet figures for the first quarter of 2021/2022. The company has a higher net income per dollar of sales than its competitors.

Meanwhile, the example of HP demonstrates once again that the star investor also follows his own advice. Buffett likes to use metaphors, once coining this stock market joke: “Opportunities rarely arise. When it rains gold, take the bucket, not the thimble.”

Large sums have flowed

The statement is clear: if investors are offered a buying opportunity, they shouldn’t splurge, they should splurge. Just like Buffett at HP. According to the US Securities and Exchange Commission announcement, the investor has purchased 121 million shares of the New York Stock Exchange-listed company. As a result, HP jumped from nowhere to 12th position in Berkshire’s portfolio. The top three positions remain Apple, Bank of America and American Express. Buffett also spent a fair amount of money on his acquisitions in March: He put $11.6 billion on the table for insurer Alleghany and $7.5 billion for Occidental Petroleum.

Experts such as those at Deutsche Bank have predicted that stock markets will plunge in the coming months. That would open up new buying opportunities. If Warren Buffett keeps up his current shopping spree, his fans may soon have something to do again.

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