Billionaire investor Warren Buffett spoke this weekend in a much-anticipated question-and-answer session at Berkshire Hathaway’s annual shareholder meeting. Over the past couple of years, Buffett has been making some atypical investment decisions while at the same time holding on to record amounts of cash.
In addition to investing in a number of large tech companies, something that he has rarely done in the past, Mr. Buffett made news when he mentioned that Berkshire would be putting “a lot of money” into energy stocks in the coming future.
The Oracle of Omaha bragged that Berkshire will be creating as much energy through wind-powered sources as all of its customers in the state of Iowa use. When asked specifically how the company would be investing in energy, Mr. Buffett asked Gregory Abel, head of Berkshire’s non-insurance businesses and potential CEO candidate, to elaborate.
Abel went on to say that as they continue to focus on renewable energy projects in Iowa, adding that Berkshire will be eliminating all coal from its power-generation complex by 2023, a statement which was met by the crowd with applause.
Buffett chimed in, saying that Berkshire had little patience for “needless reporting” that often plagues the field of sustainable investing analysis, such as filling out forms and questionnaires on social, governance, and environmental measures. At the same time, he went on to say that the company is more interested in working with individual shareholders than large company institutions.
This, he cites, is because the current corporate climate in America is quite fearful of activist investors who might “upset the apple cart.” This way, by working with individuals such as owners or majority shareholders of these companies, he can avoid this unnecessary corporate drama.
Additionally, Buffett also made news when he said the Berkshire had for the first time bought shares of internet retailing giant Amazon (NASDAQ: AMZN). This marks a massive shift in investment philosophy for Buffett, who while having been a long-time fan of Jeff Bezos’ leadership, has refrained from investing in the company because he didn’t see at the time how Amazon could make the transition from selling books to operating as major retailer.
“Yeah, I’ve been a fan, and I’ve been an idiot for not buying” said Buffett in an interview with CNBC. “I’ve always admired Jeff…I thought he was something special but I didn’t realize you could go from books to what’s happened there.”
In both cases, these investment decisions have marked a shift in strategy for the Oracle of Omaha. By his own admission, the tech sector has remained outside Buffett’s field of expertise, but even these recent forays into the energy markets have been somewhat atypical.
Earlier in the year, it was revealed that Berkshire bought shares of Canadian energy giant Suncor Energy (TSE: SU). But Buffett’s biggest move in the energy sector was a $10 billion commitment made in financing for Occidental Petroleum’s (NYSE: OXY) acquisition of Anadarko Petroleum (NYSE: APC) in exchange for an eight percent dividend yield on preferred shares.
Even with these big deals, Berkshire is sitting on an exceedingly large chunk of cash, around $50 billion, as many suspect that Buffett has been struggling to find large investment opportunities at good prices.