Premarket stocks: Warren Buffett is buying big again

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

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

hp (HPQ) shares rose 14% in premarket trading on Thursday.
It’s the latest in a string of big purchases Buffett has made in the past month. In March, Berkshire increased its stake in Western Petroleum (OXY) and announced an agreement to buy Alleghany Corporation, an insurer, for $11.6 billion.

One step back: Buffett, known for his love of bargains, has complained that he was not spotting good investment opportunities for Berkshire Hathaway.

“We found little to excite us,” he wrote in a letter to shareholders in February.

That put him out of a trading frenzy during the economic recovery from the coronavirus. Last year, low borrowing costs helped push mergers and acquisitions to an all-time high.

But now, with the war in Ukraine and concerns about how quickly the Fed will withdraw support for the economy weighing on stocks and deals, he seems more inclined to spend big.

How Buffett measures up: Buffett’s conservatism generated a lot of chatter last year. Where was the Oracle of Omaha and what was it waiting for? But Berkshire Hathaway shares were still up nearly 30%, while the S&P 500 was up 27%.

This year, Berkshire is looking even better. Its stock is up 15%. The S&P 500 is down 6% so far this year.

One of the main reasons is Buffett’s continued commitment to the energy sector, even as other high-profile investors try to give their portfolios a green makeover. Shares of energy companies have soared this year as prices for oil, gas and coal soar.

In addition to its nearly 15% stake in Occidental Petroleum, Berkshire owns a portion of Chevron (CLC) values. Occidental’s shares are up 96% in the first quarter, while Chevron is up almost 40%.

Berkshire also has a huge energy subsidiary that owns leading electric utilities like PacifiCorp and MidAmerican, natural oil and gas pipelines, and several renewable energy companies.

Greg Abel, the Berkshire vice chairman who oversees Berkshire Energy and the company’s other nonfinancial businesses, was chosen last year to succeed Buffett, now 91, as Berkshire’s chief executive.

US oil falls below $100 a barrel

Oil prices remain extremely high. But this week there has been some relief as the West draws deeper into its emergency reserves.

The latest: The Paris-based International Energy Agency announced Wednesday that member states will supply the oil market with an additional 60 million barrels of crude from emergency reserves.

The news caused a drop in oil prices of more than 5%. US crude futures fell to $96 a barrel. Brent crude, the world benchmark, fell to $101 a barrel.

The 60 million barrels will add to the record 180 million barrels of oil that President Joe Biden recently announced would be released from US reserves. The United States plans to release 1 million barrels a day over the next six months.

The moves are designed to help the world get rid of Russian supplies. The IEA said Russia could be forced to cut output by 3 million barrels a day this month as it struggles to find buyers after Ukraine’s invasion.

Gasoline prices have fallen since the reduction in the reserve was announced. On Thursday, a gallon of gasoline cost an average of $4.15 in the United States, up from $4.23 a week ago.

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

Members of Congress questioned Big Oil executives about rising gasoline prices at a hearing Wednesday. They demanded to know why growers weren’t moving faster to ramp up production.

“Gasoline prices cannot continue to depend on the whims of autocrats like Putin, who can weaponize oil against us,” said Rep. Raul Ruiz, a California Democrat.

Executives said they were doing what they could but faced a lack of equipment and a shortage of workers. They also resisted calls by Democrats to eliminate shareholder rewards like dividends and buybacks during the Ukraine war.

Shell’s departure from Russia cost up to $5 billion

When shell (RDSA) announced that it would leave Russia, it was clear that it would be expensive. But the withdrawal will be even more costly than the oil giant initially expected, an indication of how the war in Ukraine is shaking up global business.
This just in: Shell said on Thursday it will write down up to $5bn as a result of the decision, more than previously disclosed. The company had said writedowns from Russia would reach about $3.4 billion.

As a $210 billion company, Shell will be able to weather the blow. Also useful? High oil prices, which increase revenues and allow the company to make a profit through its energy trading business.

Crude prices soared to an average of more than $100 a barrel last quarter, their highest level since 2014. Shell said it expects profits from oil trading to be “significantly higher.” It reports first-quarter results next month.

On the radar: Shell did not provide any details about the future of its holdings in Russian projects, including a major liquefied natural gas plant in the east.

Finding a buyer for his holdings could prove difficult as Western companies steer clear of Russia’s energy sector.

Until next time

Conagra (CAG) Y constellation markings (STZ) report results before US markets open.

Also Today: US Jobless Claims for last week’s release at 8:30 am ET.

Coming tomorrow: India’s central bank announces its latest policy decision.

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