Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) investors have been waiting patiently for the company to put its billions to work. Warren Buffett and his stock pickers have had a few quarters of active stock buying in the past few years, but the company's cash hoard has steadily grown since its last major purchase -- the January 2016 acquisition of Precision Castparts.
At the end of 2019, Berkshire had about $128 billion in cash and equivalents on its balance sheet, and the company raised a few billion more by issuing bonds in Europe and Asia. Since the COVID-19 pandemic and the resulting bear market began, investors have been waiting to see if the company will finally make some big moves.
So far, no major investments have come to fruition -- at least not in the acquisition department. And judging by recent comments by Berkshire's Vice Chairman Charlie Munger, there aren't companies calling Berkshire for financial help or any big acquisition targets in the company's immediate future.
Is Berkshire buying stocks?
Although it doesn't seem likely that a major acquisition will be made (at least in the very near term), Berkshire could be putting some of its money to work in the stock market during the COVID-19 pandemic. Berkshire's stock purchasing has been unusually light in recent quarters, and Buffett expressed frustration at generally high business valuations.
The recent plunge into a bear market could produce some compelling investment opportunities. For example, bank stocks (a Buffett favorite) are trading for some of their lowest price-to-book valuations in years. JPMorgan Chase, to name one, is a relatively recent addition to Buffett's portfolio -- at 2% of the outstanding stock, it's a relatively small stake compared to the company's other bank investments.
Massive Berkshire holding Apple was 25% or more off its recent highs for several weeks in March. And other Berkshire favorites such as General Motors and Visa are trading for much less than their recent highs.
Here's when we'll find out
To be clear, we have absolutely no idea if Warren Buffett has been a net buyer of stocks in 2020 and in which companies he may have bought shares.
The first important date for investors to watch is Saturday, May 2. That's when Berkshire will release its first-quarter earnings report, and we'll get a glimpse of how much cash the company had as of March 31, when the bear market was already well underway. If the cash hoard has declined significantly, we can infer that Berkshire has been doing some stock buying since there haven't been any major acquisitions announced.
The second date to watch is May 15. On that date, Berkshire's 13-F will be filed with the SEC, detailing its stock portfolio as of the end of the first quarter. That's the date when we'll learn exactly what stocks Buffett and his team bought and sold by the end of March.
It's entirely possible Buffett stayed on the sidelines during the first quarter as the COVID-19 pandemic worsened. But consider these things Buffett has said over the years:
- "The best chance to deploy capital is when things are going down."
- "Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."
- "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
With these sayings in mind, I wouldn't be at all surprised if Buffett got a bit aggressive with Berkshire's capital toward the end of the first quarter. We'll find out soon enough.