- Warren Buffett’s Berkshire Hathaway could invest over $33 billion in less than 18 months.
- Berkshire recently invested in Occidental Petroleum and HP and struck a deal to acquire Alleghany.
- Buffett’s company could also increase its stake in its energy unit and Pilot Flying J.
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Warren Buffett’s Berkshire Hathaway is on track to invest more than $33 billion in 18 months.
This year, the famous investor’s company put about $7 billion into Occidental Petroleum stock and snatched up $4 billion worth of HP stock in 11 days. Buffett also closed a deal to acquire Alleghany for $11.6 billion in less than two weeks.
James Shanahan, senior equity analyst at Edward Jones, expects a few more deals to materialize over the course of the next year. Berkshire is expected to spend about $4 billion to increase its stake in Pilot Flying J to 80% in early 2023, he told Insider.
Additionally, Buffett’s company could soon buy the 8% of Berkshire Hathaway Energy owned by the family of Walter Scott Jr., a Berkshire director until his death last September. That would take his stake to over 99%, Shanahan said.
If Berkshire issues $33 billion, that would exceed the $30 billion it stacked in stocks in 2020 and dwarf the $8 billion it invested in stocks last year ( ignoring the stock sales in both years).
It would also surpass the $25 billion it spent on share buybacks in 2020 and the $27 billion it spent on buybacks last year.
Regardless, Berkshire could still struggle to put a dent in its cash stack. The company generates about $33 billion in free cash flow every five quarters, Shanahan told Insider.
“There’s a good chance Berkshire will still have $150 billion in cash by mid-2023 unless additional investments are made,” he said.
Berkshire’s shares are up 14% this year, offsetting the S&P 500’s 8% decline over the same period. Shanahan downgraded the stock to a “hold” rating this week, claiming that its current price already reflects its likelihood of outperforming its financial services peers this year, its recent strong gains and its spate of buying.
The conglomerate owns numerous companies, including Geico, See’s Candies, and the Burlington Northern Railway. It also holds multi-billion dollar stakes in Apple, Coca-Cola, Kraft Heinz, and other public companies.
Buffett, nicknamed the “Sage of Omaha,” is expected to spend several hours questioning at Berkshire’s annual shareholder meeting in his hometown next week. The billionaire investor recently touted the event as a “very, very important gathering.”