Tag Archives: Warren Buffett

Business

Stock futures rise after Wall Street suffers first decline in three sessions

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Stock futures were higher Tuesday morning after ending the day lower, snapping a two-day advance that started when a better-than-expected inflation report stoked hopes that the Federal Reserve would soon ease up on raising interest rates.

Futures tied to the Dow Jones Industrial Average rose 117 points, or 0.35%. S&P 500 futures and Nasdaq-100 futures gained 0.46% and 0.71%, respectively. Taiwan Semiconductor, Louisiana-Pacific and Paramount jumped after regulatory filings showed that Warren Buffett’s Berkshire Hathaway had bought new positions in the first two, and raised its stake in the last.

Investors also watched for filings to see what major investors Michael Burry, Bill Ackman, David Tepper and others bought or sold through the third quarter.

Stocks whiplashed during the day Monday on comments from Federal Reserve leaders Lael Brainard and Chris Waller about rate hikes going forward. While Brainard said the central bank could ease off rate increases, Waller said the market was overly optimistic and should brace for higher rates.

“After last week’s CPI undershoot prompted a huge equity rally & reversal in the Dollar, the critical topic for markets this week will be the Fed’s reaction,” wrote Huw Roberts, head of analytics at Quant Insight, in a Monday note.

He added that the degree to which speakers this week push back or endorse the market’s recent moves “will be critical.”

Stocks slipped later on a report that Amazon will lay off about 10,000 employees, potentially starting this week.

Markets will get more inflation information on Tuesday when the producer price index, a measure of wholesale inflation, is released. Investors will also study comments from Philadelphia Fed President Patrick Harker, Fed Governor Lisa Cook and Fed Vice Chair for Supervision Michael Barr.

Earnings season continues this week with retail reports on deck. Walmart and Home Depot release results Wednesday while Target, Lowe’s, Bath and Body Works, Macy’s, Kohl’s and Foot Locker report later in the week.

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Business

Taiwan Semi, Paramount Global and more

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Check out the companies making headlines in after-hours trading.

Taiwan Semiconductor Manufacturing — Shares of Taiwan Semiconductor jumped 6.4% after Warren Buffett’s Berkshire Hathaway said it now has a $4.1 billion stake in the company. It’s a new position for Buffett’s firm.

related investing news

Paramount Global — Shares of Paramount Global gained 3.4% in after-hours trading after Warren Buffett’s Berkshire Hathaway disclosed that it increased its holding in the company to $1.7 billion in the third quarter.

Louisiana-Pacific — Louisiana-Pacific, a building company, gained 9.3% after Berkshire Hathaway took a new position in the name, investing $297 million in the third quarter.

Jefferies Financial Group — Shares of the investment bank rose 5.3% after Warren Buffett’s company Berkshire Hathaway announced a $12.8 million stake, which it bought in the third quarter.

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Business

BYD shares jump after Chinese EV maker forecasts surging profits

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Warren Buffett-backed BYD said it expects a more than 300% jump in third-quarter profit. Despite headwinds including a resurgence of Covid in China, rising material costs and a slowing economy, BYD has remained fairly resilient.

Nathan Laine | Bloomberg | Getty Images

Shares of Chinese electric carmaker BYD rose Tuesday after the company forecast a huge jump in profit for the third quarter.

Late Monday, the Warren Buffett-backed firm said net profit in the three months to Sept. 30 is estimated to be between 5.5 billion yuan to 5.9 billion yuan ($764.5 million to $820 million), a rise of 333.6% to 365.11% versus the same period last year.

BYD’s Hong Kong-listed shares were 5.6% higher in afternoon trade.

“In the third quarter of 2022, despite the complex and severe economic situation, the spread of the pandemic, extreme high temperature weather, high commodity prices and other unfavorable factors, the new energy vehicle industry continued to accelerate its upward trend,” BYD said in a statement.

The company said sales volume of its new energy vehicles, which include electric cars, “continued to reach record highs” helping boost market share and “driving significant improvement in earnings and effectively relieving the pressure on earnings brought by the rising prices of upstream raw materials.”

A number of electric carmakers from Tesla to BYD to have been grappling with the rising cost of raw materials, such as lithium, that are critical to batteries.

From the start of the year to the end of September, BYD has sold 1.18 million new energy vehicles, trumping Tesla’s figure of just over 900,000 deliveries.

BYDs various models are among the top-selling new energy vehicles in China which is the world’s largest electric car market.

While the Shenzhen-headquartered company has remained fairly resilient in the face of headwinds such as a resurgence of Covid in China and a slowing economy, its smaller rivals have faced difficulties.

In August, Chinese electric car start-up Xpeng reported weak vehicle delivery guidance for the third quarter.

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Business

China EV maker BYD shares fall after Warren Buffett cuts stake

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Hong Kong-listed shares of BYD tumbled on Wednesday after Warren Buffett’s Berkshire Hathaway trimmed its stake in the Chinese electric car maker — and one fund manager said this could be a warning sign of more to come.

The conglomerate slightly reduced its shares from 20.04% to 19.92%, according to a filing on the Hong Kong exchange. Berkshire sold 1.33 million shares of BYD for about $47 million — the conglomerate now owns 218.7 million shares, the filing showed.

“This is a common trend for investors starting to take cash from the market,” Yang Liu, Atlantis Investment’s chairperson and chief investment officer, told CNBC’s “Street Signs Asia” on Wednesday.

“Maybe we’ll see more.”

BYD shares plunged more than 12% during Wednesday’s session in Hong Kong, and was the worst performer on the Hang Seng Index, according to Refinitiv data. The stock has jumped more than 600% in the past 10 years.

Earlier this week, the company reported strong numbers for the first half of 2022 with its net income for the period totaling 3.6 billion yuan ($521 million), tripling from a year earlier.

When asked about what this means for the Chinese electric vehicle market, Liu said Berkshire’s latest move could be “warning signs that the market may be [coming] to a big correction.”

“There is too much uncertainties and I think [Buffett] got a little bit nervous,” she said. “Maybe this recession in front of us for the U.S. economy and also a weaker Chinese consumption altogether brings down investors’ confidence to a larger scale.”

Room for more China stimulus

Looking ahead to China’s upcoming National People’s Congress in October, Liu said China has room for more government stimulus measures, and said the current package was “not enough.”

Last week, China’s State Council announced a slew of stimulus measures worth tens of billions of dollars, as the country seeks to boost its economy which has been battered by Covid lockdowns and a real estate crisis.

“There is room for government to help the economy and push up confidence,” the fund manager said.

She said that people will be looking for clues on the government’s outlook for growth “to see what’s going on.”

“It will give us a big indication [on] where China’s economy will go,” including the direction of the government’s zero-Covid policy and what measures will be taken to tackle low consumption, she said.

“The economy needs confidence to believe, it’s now all about the confidence,” Liu added.

— CNBC’s Yun Liu contributed to this report.

Correction: This story has been updated to correct the year for which BYD reported earnings.

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Business

Warren Buffett Not Expected to Bid for Control of Occidental Following Approval for Bigger Stake

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Warren Buffett’s

bid to boost his big stake in

Occidental Petroleum Corp.

OXY 9.88%

even further isn’t expected to serve as a prelude to a full takeover of the resurgent energy company by the widely watched billionaire, at least for now.

In a regulatory filing Friday, the Federal Energy Regulatory Commission said that Mr. Buffett’s

Berkshire Hathaway Inc.

BRK.B -2.30%

had received permission to buy up to 50% of the driller’s shares. The news stoked speculation that Berkshire could be gearing up to acquire Occidental.

Analysts have said Occidental’s oil business would complement Berkshire’s existing energy holdings, which include utilities, natural gas and renewables. Mr. Buffett has a warm relationship with Chief Executive

Vicki Hollub

and has publicly praised her efforts to turn the company around after its acquisition of Anadarko Petroleum Corp. and her plans to pay down debt and increase dividend payouts.

But Mr. Buffett hasn’t informed Occidental of any plans to acquire a controlling stake in the company, according to people close to the matter. Given Mr. Buffett’s well-known aversion to hostile deal making, it would be out of character for him to make a bid without sounding out the company’s executives and directors first.

Owning such a big stake—Berkshire is Occidental’s largest shareholder—gives him major influence over the company already, and acquiring control could cost him a hefty premium to the current share price. The stock closed Friday at $71.29, up nearly 10% on the news, giving the company a market capitalization of about $66 billion.

Why would Berkshire seek out permission to buy more of Occidental, then?

For one, it was close to running up against FERC-imposed investing limits.

Filings show Berkshire currently has a 20% stake in Occidental. It also has warrants to purchase another 83.9 million common shares and 100,000 shares of preferred stock that pay a hefty dividend—both of which it acquired after helping Occidental finance its 2019 acquisition of Anadarko.

If Berkshire were to exercise the warrants, its stake would rise to roughly 27%. That would have exceeded the 25% limit FERC allowed for before Friday’s ruling.

“This is not a company that’s going to raise regulators’ hackles,” said Cathy Seifert, an analyst for CFRA Research.

It should also give Berkshire breathing room in case share buybacks or other company moves decrease the amount of shares outstanding, thus increasing its percentage stake.

There are other reasons to doubt a Berkshire takeover of Occidental is imminent.

One of them is price, said David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business.

So far, Berkshire has bought virtually all of its Occidental shares at a price in the range of $50 to $60, Mr. Kass said. The highest price Berkshire paid was $60.37 in July, according to filings.

Mr. Buffett is a well-known bargain-hunter, so it is difficult to imagine Berkshire rushing to buy more Occidental shares at the current price, Mr. Kass said. The shares are up 146% for the year, boosted by a rally in the price of oil, compared with an 11% decline for the S&P 500.

People familiar with deliberations at Occidental said the company’s leadership believes Mr. Buffett might consider making an offer if oil prices fall, bringing down Occidental’s stock price. If Mr. Buffett made an offer the company viewed as fair, a majority of the Occidental’s board would likely approve presenting it to shareholders, one of the people said.

Mr. Buffett didn’t respond to a request for comment. An Occidental spokesman declined to comment.

Mr. Buffett is currently represented as a passive shareholder in Occidental, based on the so-called 13G filing he has on record with the U.S. Securities and Exchange Commission. If he were to change his intentions and hold meaningful discussions with the company about a full-on takeover, he would likely need to change his filing to a 13D, which is required by large shareholders who intend to get actively involved in the running of a company.

Taxes could also play a role in Mr. Buffett’s bid for a bigger minority stake in Occidental. Corporations with a stake of at least 20% in another company are eligible to deduct 65% of dividends received, up from the standard 50%.

Berkshire’s 20% stake also allows it to include a proportionate share of Occidental’s earnings in its own results. That could give its earnings a multibillion-dollar boost annually, based on analyst estimates of Occidental’s earnings. Before the most recent purchases, disclosed this month, Occidental fell below the 20% threshold for both benefits.

Since Berkshire started buying Occidental shares in February, Mr. Buffett has had a friendly and collaborative relationship with Ms. Hollub, and the pair speak regularly, according to people familiar with the matter.

When Mr. Buffett bought another slug of Occidental shares this spring, he called Ms. Hollub to let her know about the transaction, according to one of the people. Ms. Hollub was driving at the time and pulled over to take the call, the person said.

Mr. Buffett’s message was simple: “Keep doing what you’re doing,” he told Ms. Hollub.

Berkshire’s growing ties with Occidental have an unexpected link to Mr. Buffett’s earliest days of investing.

At age 11 in 1942, Mr. Buffett made his first investment: three shares of Cities Service’s preferred stock. Forty years later, Occidental went on to acquire the oil company, which Ms. Hollub had just joined the year before.

Mr. Buffett’s investment in Occidental this year shows his first stock purchases “coming full circle 80 years later,” Mr. Kass said.

—Benoît Morenne contributed to this article.

Write to Akane Otani at akane.otani@wsj.com, Christopher M. Matthews at christopher.matthews@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

These 20 EVs Will Keep Their Tax Credits for Now

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Photo: Ford

There are 20 electric vehicles that will qualify for the $7,500 EV tax credit through the end of the year, the U.S. and Mexico are ending a labor probe at a Mexican Stellantis plant, and Warren Buffet doesn’t seem to0 worried about the car market. All that and more in The Morning Shift for Wednesday (my dudes), August 17, 2022.

1st Gear: The 20 Qualifiers

President Biden signed the sweeping tax, climate and health care bill on Tuesday, and the administration now says about 20 models will still qualify for the up to $7,500 EV tax credit through the end of 2022.

That being said, the law immediately ends credits for almost three quarters of the 72 models that were previously eligible. That’s because, in order to qualify, the EVs must now be assembled in North America.

The number of eligible vehicles is likely to change come January 1, 2023, when new restrictions on battery and mineral sources and pricing caps come into play. The Alliance for Automotive Innovation, an industry trade group, says it’ll make all or nearly all EVs ineligible. From Automotive News:

The automaker group said it will work with the administration “as they issue critical guidance and new regulations – so the EV tax credit is as available and beneficial to consumers as possible.”

Currently eligible vehicles are 2022 model year EV or plug-in hybrid electric versions of the Audi Q5; BMW X5 and 3-Series Plug-in; Ford Mach-E, F-Series, Escape PHEV and Transit Van; Chrysler Pacifica PHEV, Jeep Grand Cherokee PHEV and Wrangler PHEV; Lincoln Aviator PHEV and Corsair Plug-in; Lucid Air; Nissan Leaf; Volvo S60; and Rivian, R1S and R1T. The 2023 Nissan Leaf, BMW 3-Series and Mercedes EQS are also eligible.

Some models are built both in North America and overseas and consumers should check vehicle identification numbers to ensure eligibility, the Treasury Department said.

…

Buyers can still qualify if they had binding written contracts before Biden’s signing and some automakers had been urging customers to make portions of deposits non-refundable to qualify.

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The law also makes General Motors and Tesla vehicles eligible for tax credits starting on January 1. They had previously lost the credits after hitting the old 200,000-vehicle per manufacturer cap. However, it’s not clear if any of the vehicles they make would qualify under the new restrictions.

2nd Gear: U.S. and Mexican Labor Probe Ends

The U.S. and Mexican governments have resolved a labor dispute with a Mexican Stellantis manufacturing plant.

The agreement at Teksid Hierro de Mexico is the fourth labor probe to end under the 2020 United States-Mexico-Canada Agreement (USMCA). It was one of Mexico’s longest-running labor conflicts.

U.S. labor officials said workers at the plant, which makes parts for heavy vheicles including Cummins, Volvo and Mack, were previously denied their rights to choose their union and do collective bargaining. From Reuters:

Reuters reported last week that Teksid, which employs some 1,500 people, expected to close the case without going to a dispute panel after the company recognized an independent union, a move workers attributed to U.S. pressure under the USMCA.

Workers since 2014 had fought to establish a union known as The Miners at the Teksid plant in the northern state of Coahuila, and accused the company of colluding with a powerful rival union to block their efforts.

…

The USMCA resolution “will help end eight years of rights violations against Teksid workers,” U.S. Labor Secretary Marty Walsh said in a statement.

As part of the agreement, the unit of Italian-French carmaker Stellantis in July agreed to re-hire, with back pay, 36 workers who said they had been fired in retaliation for supporting the union, which also represents metalworkers and miners.

Stellantis says it is “diligently cooperating” with governmental officials during the process. The company says it respects collective bargaining rights and will comply with local laws.

3rd Gear: Buffett Ain’t Worried

Warren Buffett doesn’t seem to think the good times are over for car dealers just yet. New filings show Berkshire Hathaway tripled its stake an Ally Financial, a long-time automotive financial company, to $1 billion in the second quarter of 2022.

The world’s most famous investor seems to believe lending margins will remain strong and default rates will stay low. From Financial Times:

In the two pandemic years, shares in Ally rallied 57 per cent. The stock was buoyed by consumers flush with cash flocking to buy used vehicles. Auto manufacturers were unable to meet demand for new cars.

Ally shares, have fallen by a quarter so far in 2022. Wall Street is worried about the finances of the US consumer as well as a normalisation in the auto market. Ally says those worries remain overstated, a view that now has the implicit endorsement of a legendary investor.

Between the end of the 2019 and the start of 2022, the Manheim Used Vehicle Value Index increased by a vertiginous 70 per cent. Higher used car prices supported bigger loans at a time when there were virtually no concerns about immediate credit losses.

Net interest revenue increased substantially in the current quarter, compared with 2021. However, Ally was forced to accrue credit loss provisions so big that pre-tax income fell 40 per cent year on year. The company insists those provisions are simply a natural reversion to ordinary levels.

The move is a vote of confidence not only in auto loans, but in consumer spending power as a whole. If Warren’s not worried about our ability to confidently spend money, why should we be?

4th Gear: BMW’s Battery Switch Up

China’s EVE Energy CO Ltd is going to start supplying BMW with large cylindrical batteries for the company’s electric cars in Europe. It’s reported BMW is following in Tesla’s footsteps by adopting the new technology. Vehicles with the new batteries are due to hit the market in 2025.

Earlier this year, Tesla starting manufacturing its new large-format 4680 cylindrical battery. 4680 means 46 millimeters in diameter and 80 millimeters in length. Tesla says it expects the new battery to lower production costs and improve range compared to the current-generation 2170 cylindrical batteries.

EVE’s batteries are expected to be a similar size to Teslas. From Reuters:

EVE, a supplier to BMW in China, did not directly address Reuters queries when asked for comment. BMW said it plans to release some battery-related news in early September but declined further comment.

The shift by BMW, which currently uses prismatic batteries, underscores growing momentum for larger-format cylindrical batteries. Prismatic batteries, which are rectangular in shape, have become the most common form of auto battery in the past two years as they can be more densely packed, saving on costs. But proponents of cylindrical batteries argue the newer larger format cells have become more cost-effective due to improvements in energy density.

China’s CATL (300750.SZ), the world’s largest battery maker, is also due to start supplying cylindrical batteries to BMW from 2025.

Expectations are high that these batteries will also be large-sized cells. CATL did not respond to a request for comment on planned dimensions.

Right now, it’s not clear exactly how many batteries BMW plans to get from EVE and CATL.

5th Gear: Out Of Power

Toyota has suspended operations at one of its plants in China after local authorities issued an order to conserve electricity. The manufacturing facility will be shuttered until Saturday, according to a spokesperson for the company.

Sichuan province, where the plant is located, is rationing industrial electricity consumption during its worst heatwave in 60 years. It’s caused producers of fertilizers, lithium and other metals to suspend plant operations or curb output. From Reuters:

Industrial users across 19 out of 21 cities in the province were ordered to suspend production from Aug. 15 until Aug. 20 to prioritise residential power supply, according to a notice issued on Sunday by the Department of Economy and Information Technology of Sichuan.

…

“We’re monitoring the situation every day and following the guidance from the government,” the Toyota spokesperson said.

Toyota wouldn’t say just how much vehicle output would be impacted by the suspension.

Reverse: Up!

This is transportation content if I’ve ever seen it.

Neutral: I’m A Gossip Girl Now

I just signed the lease on an apartment on the Upper East Side of Manhattan. Call me Blair Waldorf, because I’m very fancy. Unfortunately, this will continue my issue of not being able to have my car in the same state I live in. You win some, you lose some. What can ya do, ya know? It’s going to be a fun time. Buh bye, Lower Manhattan.

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World

Rakesh Jhunjhunwala, ‘India’s Warren Buffett’, dies at 62

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Stock investor Rakesh Jhunjhunwala, dubbed India’s Warren Buffett with an estimated net worth of $6 billion, died early on Sunday at age 62, his family said.

A chartered accountant by profession from the desert state of Rajasthan, Jhunjhunwala started dabbling in stocks while in college and went on to manage a stock trading firm, RARE Enterprises.

“Rakesh-ji passed away surrounded by his family and close aides,” a family member told Reuters, using a term for respect.

The cause of death was not immediately announced.

The promoter of India’s newest airline, the ultra low-cost Akasa Air, Jhunjhunwala appeared days ago at its public launch. He is survived by his wife and three children.

An ambulance leaves the Breach Candy hospital carrying Rakesh Jhunjhunwala in Mumbai on August 14, 2022.
AFP via Getty Images

Jhunjhunwala’s excellent communication skills helped small investors understand the stock market, said businessmen and bankers based in India’s financial capital, Mumbai, who had interacted with him for over 30 years. His insights on the economy and companies made him a popular TV celebrity.

Jhunjhunwala’s bets include a number of companies run by Tata Group, one of India’s largest conglomerates. These include Tata Motors, watchmaker Titan, Tata Communications and Indian Hotels Co, which runs the Taj hotels.

Other investments include Indiabulls Housing Finance, Star Health Insurance and Federal Bank.

Media cameras are seen outside the Breach Candy hospital where Rakesh Jhunjhunwala was admitted in Mumbai on August 14, 2022.
AFP via Getty Images

Major politicians and business leaders mourned his death on social media.

“Rakesh Jhunjhunwala was indomitable,” Prime Minister Narendra Modi wrote on Twitter.

“Full of life, witty and insightful, he leaves behind an indelible contribution to the financial world. He was also very passionate about India’s progress. His passing away is saddening. My condolences to his family and admirers.”

Modi ended with “Om Shanti”, an invocation of peace.

Uday Kotak, the chief executive of Kotak Mahindra and a friend from school days, said Jhunjhunwala had “believed stock India was undervalued” and that he was right.

“Amazingly sharp in understanding financial markets,” Kotak tweeted. “We spoke regularly, more so during COVID. Will miss you Rakesh!”

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Business

Buffett disciple Mohnish Pabrai names his favorite investing books

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Looking to invest in stocks with long-term value? Veteran investor Mohnish Pabrai has two books to recommend.

Speaking to CNBC Pro Talks, Pabrai — a value investor and disciple of billionaire Warren Buffett — said that “100 to 1 in the Stock Market” is an “extremely well-written” book.

Authored by Thomas Phelps and originally published 50 years ago, the book teaches about how to increase wealth one hundredfold through buy-and-hold investing.

Buy-and-hold is a passive investment strategy that involves purchasing stocks and holding them for a long period of time, even if there are short-term fluctuations.

The founder of the Pabrai Investment Funds, which has grown from $100,000 in 1999 to $1.2 million in revenue as of March this year, was discussing his playbook on what to buy and what to avoid.

Another book for those looking for “competitive advantage or ability to earn superior returns,” he said, is Christopher Mayer’s “100 Baggers” – which talks about companies that returned $100 for every $1 invested.

Does the business earn very high returns on equity? Can it grow and prosper without the use of debt? … Can this business reinvest the high returns and equity back at high rates?

Mohnish Pabrai

founder of the Pabrai Investment Funds

Investors should be asking themselves a few questions, he said.

“Does the business earn very high returns on equity? Can it grow and prosper without the use of debt? … Can this business reinvest the high returns and equity back at high rates?”

How to know if a company’s a ‘homerun’

To illustrate his point, Pabrai gave the example of Starbucks.

“When they open a store in the U.S., they get their money back in two years. When they open a store in China, they get their money back in 12 to 15 months,” he said.

These are “astronomical returns on capital,” the veteran investor said, adding that Starbucks had the ability to “get their money back really fast.”

“The business is getting more efficient because most of us don’t go and lounge around Starbucks. We pre-order, just pick our latte and go. And that’s even more profitable [for them].”

Pabrai summed up his idea of a “homerun” – he said it’s being able to see a clear “10-, 20-, 30-year runway.”

“What I’m trying to say is that if I find a business where the the they can grow without the
use of debt, … at a not expensive looking price, then you got yourself a homerun.”

Don’t miss: Bill Gates has 5 book recommendations for your 2022 summer reading list: ‘Compelling without sacrificing any complexity’

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Business

Coachella for Capitalists: Why bitcoin topped the bill at Berkshire Hathaway’s AGM

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It’s been called the Woodstock of Capitalism, Coachella for Capitalists, and a whole lot worse too.

What’s for certain is that Berkshire Hathaway’s annual general meeting is a must-watch event for market lovers.

While our UK readers may have been catching a break over the public holiday, the long weekend saw plenty of fiery comments from Berkshire’s storied leaders Warren Buffett and Charlie Munger, not least on the future of cryptocurrencies like bitcoin.

“Whether it goes up or down in the next year, or five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything,” Buffett said.

What’s the entire world’s stash of bitcoin worth? Not even $25, according to the Oracle of Omaha.

Not to be outdone, Munger added: “In my life, I try and avoid things that are stupid, evil and make me look bad in comparison to somebody else… and bitcoin does all three.”

Robinhood — which owed a significant part of its lockdown-induced success to bumper crypto trading volumes — also came in for another beating from Munger.

God is “getting just”, he said, as the day trading platform continues to lose customers and report stalling revenue.

The continued criticism of bitcoin marks the latest salvo in a war of words between the Berkshire bosses and crypto enthusiasts like Peter Thiel.

Last month, the billionaire entrepreneur branded Buffett a top “enemy” of bitcoin and part of a “finance gerontocracy” that has held back the cryptocurrency’s adoption — a club that also includes Jamie Dimon, chief executive of JPMorgan, and Larry Fink, chief executive of BlackRock.

Thiel’s fellow crypto fans were quick to hit back again after the Berkshire AGM.

“They’re not exactly the most technology-forward investors,” said Eric Chen, co-founder and chief executive at Injective Labs. “As a matter of fact, I think that goes more towards the affirmation that the space is really disrupting something.”

David Tawil, president and co-founder of cryptoasset fund ProChain Capital, noted that it was “decades before [Berkshire] decided to go ahead and invest in Apple”.

In case you missed any of the action from the event, see below for the most talked-about themes.

We’ve also got a roundup of what you need to know as crypto faces a challenging path ahead — down some 13% over the year to date, big names such as Starling Bank’s Anne Boden are among the latest to sound a sceptical note on bitcoin’s fortunes in recent days.

Regulators across the world are also stepping up their scrutiny of the sector.

Last week, Commodity Futures Trading Commission chair Rostin Behnam told an audience at the City Week 2022 conference that giving firms permission to clear crypto derivatives directly was not a given.

“It might not sound like a big issue, but it is a significant issue. It is really proposing and presenting a very different market structure model that has some opportunity, but certainly some risk,” said Behnam.

Meanwhile, the US Labor Department said it has “grave concerns” about Fidelity’s bitcoin pension plan, putting a potential spanner in the works for firms looking to expand crypto’s range in the retirement space.

Everything you need to know from Berkshire’s famed AGM

Warren Buffett and Charlie Munger hit out at bitcoin at Berkshire’s AGM but crypto fans are unmoved

Why Warren Buffett says markets are a ‘gambling parlour’

Berkshire Hathaway’s Charlie Munger hits out at Robinhood again

Warren Buffett Is Still Setting Berkshire’s Direction. For How Much Longer? (The Wall Street Journal)

And on crypto’s current troubles

The Fed isn’t going to save bitcoin’s bear market

Too many crypto transactions are fraudulent, Starling CEO Anne Boden warns

US Labor Department has ‘grave concerns’ about Fidelity’s bitcoin pension plan

The SEC is beefing up crypto enforcement. Its target is basically everything (Barron’s)

The new way to get a tax break: NFT and crypto donations (The Wall Street Journal)

To contact the author of this story with feedback or news, email Justin Cash

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Business

Buffett Is Betting Big On Oil And Gas Stocks

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For decades, Berkshire Hathaway (NYSE:BRK.B) Chairman and CEO Warren Buffett maintained a pretty conservative approach to investing, favoring retail and banking stocks while giving a wide berth to more volatile sectors such as tech and energy. In fact, big American banks have been Warren Buffett’s favorite investment because they are part of the infrastructure of the country, a nation he continually bets on. 

As recently as late 2019, Berkshire had large stakes in four of the five biggest U.S. banks, with Wells Fargo remaining Buffett’s top stock holding for three straight years through 2017.

But Buffett appears to have changed his investing ethos quite dramatically over the past couple of years, taking new multi-billion dollar stakes in energy and computer corporations while shunning the banking sector.

After the onset of the coronavirus pandemic in early 2020, Buffett unloaded Wells Fargo (NYSE:WFC), JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) on the cheap, despite many stocks in the sector becoming significantly cheaper to own.

“I like banks generally, I just didn’t like the proportion we had compared to the possible risk if we got the bad results that so far we haven’t gotten,” Buffett told investors at last year’s shareholder meeting.

Various analysts have shared their takes on Buffett’s banking divestments.

“What this is telling you is, he thinks we need to batten down the hatches because we’re looking at a long cycle of inflation and probably stagnation. Banks are very cyclical, and all indications are that we’re in a high inflation, high rate environment for a while. What that typically means is that lending activity is going to be compressed and investment activity is going to be depressed,” Phillip Phan, a professor at the Johns Hopkins Carey Business School, has told CNBC.

Despite rising interest rates this year, which typically boost banks because lending margins improve, the banking sector has been hammered: WFC is down 14.0% YTD, JPM has cratered 26.2% while GS has lost 22.7% on concerns that the U.S. economy could stall as the Fed combats inflation with interest rate hikes.

Buffett’s Energy Investments

Buffett has been doubling down on his energy investments while trimming his banking holdings despite oil and gas stocks being at multi-year high valuations.

To wit, the legendary investor has added new shares in red-hot E&P companies Occidental Petroleum Corp. (NYSE:OXY) and Chevron Inc. (NYSE:CVX) despite both currently trading at multi-year highs.

According to Berkshire’s latest 13F filing, the company bought 118.3M OXY shares in multiple transactions from March 12 to March 16, bringing its stake in OXY to 136.4M shares, or ~14.6% of its shares outstanding. Berkshire also owns OXY warrants granting the right to acquire some 83.9M additional common shares at about $59.62 each plus another 100,000 OXY preferred shares. Earlier, Berkshire revealed that it purchased about 9.4 million shares of oil titan Chevron in the fourth quarter, boosting its stake to 38 million shares currently worth $6.2 billion.

OXY has more than doubled over the past 12 months, while CVX is up 50%, with both stocks trading near multi-year highs. But, obviously, Buffet thinks they still have plenty of upside judging by the huge positions opened by his investment conglomerate.

Buffett is hardly alone.

Related: How 3D Printers Could Transform The Energy Industry

OXY CEO Vicki Hollub has snapped up OXY shares in the open market, even as shares trade near three-year highs. According to an SEC filing, Hollub paid $798K on March 28 for 14,191 OXY shares at an average price of $56.24, raising her holdings to 467,282 shares and an additional 23,390 shares through a savings plan. Hollub last bought OXY shares on the open market nearly three years ago, when she paid $1.8M for 37,460 shares at an average $48.15/share on June 10, 2019.

Wall Street is enthralled by OXY, too.

Raymond James analyst John Freeman recently raised his OXY price target to $85 from $60, setting a new Wall Street high. That’s good for nearly 50% upside.

OXY has 9 Strong Buy ratings; 2 Buy, 13 Hold, 1 Sell and 1 String Sell ratings on Wall Street.

Meanwhile, Shale player APA Corp. (NYSE:APA) has popped to a 52-week high after Mizuho upgraded shares to Buy from Neutral with a $56 price target, up from $38, saying the company is in a “unique spot” among oil and gas producers. 

Mizuho says APA has a “clear plan for 10%-plus cash return 2022-24 at current oil prices along with near-term growth (Egypt) and longer-term development (Suriname) catalysts outside the U.S.“

“Energy is the only sector that is seeing quality, growth, and momentum scores improve simultaneously while maintaining an attractive value and income profile,” JPMorgan’s Dubravko Lakos-Bujas has told Business Insider, adding that current estimates are conservative and understate the strong macro fundamentals going forward.

According to JPM, the energy sector still has considerable upside despite its massive runup over the past year. JPM says that a combination of rapid earnings growth and re-ratings for key multiples will help drive further upside in the sector.

A final note: oil stocks remain undervalued, with the S&P energy sector still lagging far behind its 2014 levels from the last time oil crossed $100 per barrel.

By Alex Kimani for Oilprice.com

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