Warren Buffett, CEO of Berkshire Hathaway, is known for his shrewd investments and ability to generate market-beating returns. Recently, Buffett made headlines when it was revealed that he had invested $2.9 billion in a single stock, bringing his total investment in the company to $66 billion over the past four years. The stock in question is not a surprise: it’s none other than Berkshire Hathaway itself.

Warren Buffett's Latest $2.9 Billion Buy?
Warren Buffett’s Latest $2.9 Billion Buy?

What is Warren Buffett return on investment?

Berkshire Hathaway’s Class A shares (BRK.A) have seen an aggregate gain of 3,787,464% since Buffett took over as CEO in 1965, a return that is 153 times greater than the total return of the benchmark S&P 500 over the same period. Buffett’s 13F filings with the Securities and Exchange Commission have been a goldmine for investors seeking to mirror his trading activity.

Buffett and his investing team have invested big bucks in a select few companies over the past seven years, including tech giant Apple and energy stocks Chevron and Occidental Petroleum. The Oracle of Omaha has sunk more than $33 billion into Apple in seven years and spent close to $30 billion combined purchasing shares of Chevron and Occidental Petroleum.

Berkshire Hathaway’s sudden fascination with energy stocks is likely based on the belief that crude oil prices will remain elevated for years to come, due to years of capital underinvestment tied to the COVID-19 pandemic and Russia’s invasion of Ukraine. This cap on supply should help put a floor beneath crude oil prices and boost the profit potential of Chevron’s and Occidental Petroleum’s upstream drilling segments.

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Although the Oracle of Omaha has piled into companies like Apple, Chevron, and Occidental Petroleum, there’s another stock he’s spent $66 billion buying since mid-July 2018. Interestingly, that stock is Berkshire Hathaway itself.

The key date for investors to know is July 17, 2018. Prior to this date, the only way Warren Buffett and his team could repurchase Berkshire Hathaway stock was if the company’s shares were trading at less than 1.2 times book value. However, on July 17, 2018, the company’s board of directors approved a change in its repurchase policy that allowed Buffett and his team to buy back shares whenever they deemed the stock to be trading at a discount to intrinsic value.

This change in policy has allowed Buffett to put Berkshire Hathaway’s excess cash to work in the company’s own shares, which he views as undervalued. Since the change in policy, Berkshire Hathaway has repurchased over $50 billion of its own stock, with more than $10 billion of that coming in the fourth quarter of 2022 alone.

As of the end of 2022, Berkshire Hathaway had repurchased a total of 3.3% of its outstanding shares since the change in policy. The company’s book value per share has increased by 20.8% since the end of 2018, which suggests that Buffett has been successful in buying back shares at a discount to intrinsic value.

The fact that Buffett is continuing to buy back shares suggests that he still views the company’s stock as undervalued. Investors who follow Buffett’s lead may want to consider buying shares of Berkshire Hathaway as well.

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In summary, while many investors focus on Warren Buffett’s investments in other companies, it’s important to note that he’s also been putting billions of dollars into his own company’s stock. Buffett’s belief in the undervaluation of Berkshire Hathaway’s shares is a bullish signal for the stock and a sign of his confidence in the long-term prospects of the company.

In conclusion, Warren Buffett’s latest $2.9 billion buy brings his total investment in Berkshire Hathaway to $66 billion over the past four years. While Buffett’s 13F filings have provided investors with valuable insights into his investment strategy, his decision to invest heavily in his own company suggests that he sees value in it and believes that its stock is undervalued. Whether you’re an investor seeking to mirror Buffett’s trading activity or simply interested in learning from one of the greatest investors of all time, Buffett’s moves are always worth paying attention to.

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