Warren Buffett is back in his element. After years of sitting on more and more cash, Buffett has finally opened his wallet.
The Oracle of Omaha wagered $51 billion in the first three months of the year. That’s about a third of the cash hoard his company Berkshire Hathaway has at the end of 2021.
Here are all the stocks he added to his portfolio in the first quarter of 2022. If you’re looking to buy an all-you-can-drink, these ideas might be a good place to start.
Activision Blizzard (ATVI)
Earlier this year, Buffett made a small bet on game developer Activision Blizzard. However, his stake quadrupled when he learned that the company would be acquired by Microsoft.
He now owns 9.5% of the game maker’s outstanding shares.
In a meeting with Berkshire Hathaway shareholders, Buffett claimed that this is now part of a merger arbitrage strategy.
Microsoft has offered to buy the company for $95 per share. However, Activision stock is trading above $78 on the Nasdaq exchange. If the deal with Microsoft goes as planned, Buffett could profit from a low-risk profit of $17 per share.
Flooring and Decor (FND)
Georgia-based retailer Floor & Decor has a strong position in flooring. The stock trades at 30 times earnings, with relatively high profit margins. It fits perfectly with Berkshire Hathaway’s portfolio of home services and specialty retail stores, including RH and Nebraska Furniture Mart.
Buffett added a whopping 3.9 million shares of FND to his portfolio in the first quarter.
Buffett’s bet on energy is particularly noteworthy. Oil and gas prices have soared over the past year. It is driven by a combination of increased demand and limited supply. The supply shortage was further exacerbated by sanctions imposed on major oil producer Russia due to Russia’s invasion of Ukraine.
That’s a tailwind for a company like Chevron. The company produces 2% of the world’s oil each year and also plays a key role in other parts of the energy supply chain.
Buffett got his first job at the company in 2020. However, he deployed more capital in the first quarter of this year, making Chevron the fourth-largest holding company.
Occidental Petroleum (OXY)
Occidental benefits from the same tailwinds as Chevron. The energy crisis has pushed the stock up 128% year to date. Despite the surge, its price-to-earnings ratio is still just 10.7.
Buffett bought 136 million shares of OXY in the first quarter of this year. It is now the eighth-largest holding in Berkshire Hathaway’s portfolio.
Berkshire’s portfolio is still dominated by one name: Apple.
At the beginning of the year, the company held about 887 million shares in the iPhone maker. During the quarter, Buffett added nearly $4 million more — bringing the total value of the bet to $155.5 billion. That’s almost 43% of the entire portfolio.
Oracle of Omaha appears to have overcome its reluctance to bet on tech companies. In addition to Apple and Activision, Buffett also worked at device maker Hewlett-Packard.
The overlooked consumer tech giant could be attractive given its steady profitability. For the past five years, the company’s annual free cash flow has remained at $4 billion. Some experts expect a modest increase to $4.5 billion.
This translates to a free cash flow yield of 12%. An ideal addition to Buffett’s portfolio.
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