Premarket Stocks: Warren Buffett Buys Big Again

Now that many other investors are in sell mode, he goes shopping.

What’s happening: Buffett’s Berkshire Hathaway just revealed that it bought nearly 121 million shares of HP worth about $4.2 billion, giving Buffett more than an 11% stake in the tech company.

HP (HPQ) shares rose 14% in premarket trading on Thursday.
This is the latest in a string of big purchases Buffett has made over the past month. In March Berkshire increased its share in Occidental Petroleum (OKSI) and announced an agreement to buy insurance company Alleghany Corporation for $11.6 billion.

Step back: Buffett, known for his love of bargains, complained that he did not see good investment opportunities for Berkshire Hathaway.

“We find little that we care about,” he wrote in a letter to shareholders in February.

That put him out of his deal-making frenzy during the post-coronavirus economic recovery. Last year, low borrowing costs helped boost M&A to record highs.

But now, with the war in Ukraine and worries about how quickly the Federal Reserve will withdraw support for the economy weighing on stocks and deal making, he seems more inclined to spend more.

Why Buffett is different: Buffett’s conservatism has generated a lot of talk in the past year. Where was the Oracle of Omaha and what was he waiting for? But Berkshire Hathaway is still up nearly 30% and the S&P 500 is up 27%.

Berkshire looks even better this year. Its shares are up 15%. The S&P 500 is down 6% since the start of the year.

One important reason is Buffett’s continued commitment to the energy sector, even as other high-profile investors try to make their portfolios look greener. Shares of energy companies have risen sharply this year due to the sharp rise in oil, gas and coal prices.

In addition to nearly 15% of Occidental Petroleum, Berkshire owns Chevron (CVX) supply. Occidental stock jumped 96% in the first quarter, while Chevron stock jumped almost 40%.

Berkshire also has a large energy subsidiary that owns leading electric utilities such as PacifiCorp and MidAmerican, oil and gas pipelines, and several renewable energy companies.

Greg Abel, Berkshire’s vice chairman who oversees Berkshire Energy and other non-financial businesses, was appointed last year to replace Buffett, now 91, as Berkshire’s CEO.

US oil falls below $100 a barrel

Oil prices are still extremely high. But there has been some relief this week as the West draws on more of its emergency reserves.

Latest: Paris International Energy Agency. announced Wednesday that Member States will supply the oil market with an additional 60 million barrels of emergency crude oil.

The news sent oil prices down more than 5%. Oil futures in the US fell to $96 per barrel. Brent crude, the world benchmark, fell to $101 a barrel.

Those 60 million barrels will add to the record 180 million barrels of oil that President Joe Biden recently announced would be released from America’s reserves. The United States plans to produce 1 million barrels per day over the next six months.

These steps are designed to help the world stop deliveries from Russia. The IEA said Russia could be forced to cut production by 3 million barrels a day this month as it struggles to find buyers after invading Ukraine.

Gasoline prices fell after it was announced the reduction of reserves. A US gallon of gasoline averaged $4.15 on Thursday, up from $4.23 a week ago.

But the cut is unlikely to ease the fears of consumers, who paid an average of $2.87 a gallon a year ago.

Members of Congress grilled heads of Big Oil about the jump in gas prices at the hearings on Wednesday. They demanded to know why manufacturers weren’t moving faster to increase production.

“Gas prices can no longer be subject to the whims of autocrats like Putin, who can use oil against us,” said Rep. Raul Ruiz, a California Democrat.

The leaders said they did everything they could, but faced a lack of equipment and a shortage of labor. They also resisted Democrats’ calls to forgo shareholder rewards, such as dividends and share buybacks, during the war in Ukraine.

Shell exit from Russia cost $5 billion

When shell (RDSA) announced that he was leaving Russia, it was clear that it would be expensive. But the exit will cost even more than the oil giant originally envisioned, a sign that the war in Ukraine is shaking global business.
It’s just that: Shell said on Thursday that it write off up to $5 billion. as a result of the decision, more than was previously disclosed. The company said write-offs in Russia would total about $3.4 billion.

As a $210 billion firm, Shell will be able to take the hit. Also helpful? High oil prices, which increase revenue and allow the company to profit from energy trading.

Crude oil prices rose to an average of more than $100 a barrel last quarter, the highest level since 2014. Shell said it expects oil trading revenues to be “significantly higher”. He will report first quarter results next month.

On the radar: Shell hasn’t given any details about the future of its stake in Russian projects, including a major LNG plant in the east.

Finding a buyer for its assets may be difficult as Western companies avoid involvement in the Russian energy sector.

Next

Conagra (KAG) as well as Constellation of brands (STZ) report the results before the opening of US markets.

Also today: Report on US jobless claims last week at 8:30 AM ET.

Tomorrow: The Central Bank of India announces its latest policy decision.

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