Buffet brokerage discards billions of dollars in stocks – 05/06/2023 – Market

Buffett’s brokerage firm, Berkshire Hathaway, sold billions of dollars in stocks and put little money on the US Stock Exchange in the first three months of this year. Apparently, the famous investor sees little appeal in a volatile market.

Berkshire announced this Saturday (6) that it sold shares valued at US$ 13.3 billion (R$ 66.1 billion) and bought shares for values ​​below half of that. It chose to direct US$ 4.4 billion (R$ 21.9 billion) to its own shares and another US$ 2.9 billion (R$ 14.4 billion) to shares of other publicly traded companies.

The numbers underscore the difficulty Berkshire faces putting its wealth to good use at times when Buffett and his longtime right-hand man, Charlie Munger, find market valuations unattractive. The company’s reserve currency has increased by $2 billion since the start of this year, to $130.6 billion, its highest level since the end of 2021.

Munger told the Financial Times, last month, that investors should reduce their expectations of profits with the financial market, while the Fed (US central bank) continues to raise interest rates, and the economy continues to slow down.

Berkshire reported first-quarter earnings of $35.5 billion ($173.9 billion), or $24,377 (R$121,129) for each Class A share — up from $5.6 billion for the last year. That number was driven in large part by a rally in equities that lifted the brokerage’s portfolio value to $328 billion in stocks.

Operating profits — the measure Buffett prefers to evaluate the various sectors included in Berkshire’s business — increased 12.6% over the previous year and reached $8.1 billion. For the first time, this figure includes the results of the Pilot Flying J truck station company, of which Berkshire took majority control in January.

That data was released hours before Buffett and three other Berkshire executives appeared in downtown Omaha, in the US state of Nebraska, where thousands of shareholders have gathered for the company’s annual meeting.

Shareholders will hear the 92-year-old billionaire and his vice presidents Munger, Gregory Abel and Ajit Jain discuss the economy, the Fed’s efforts to curb inflation and prospects for the brokerage.

The cadres must come under pressure to say why the lack of investment in the US banking system, as they had done in the financial crisis of 2008.

At that time, Berkshire participated in the rescue of Goldman Sachs and Bank of America. The latter is now a centerpiece in the broker’s portfolio.

Berkshire shares have gained 4.9% since the start of this year.