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Warren Buffett Bought $1.5 Billion of Stocks in Q1 2006?

May 07, 2006 | About:
Untitled Document

Warren Buffett has found a lot to invest these days. The cash position is Berkshire Hathaway has been continuously declining since 2004, as reported in the quarterly and annual reports of Berkshire Hathaway. During the first quarter of 2006, the cash and cash equivalents of Berkshire has reduced from $38.8 billion to 36.5 billion, while its equity holdings has increased from $46.4 billion to $49.47 billion.

Berkshire spent $5.46 cash in business acquisitions, this may be related to the recently reported acquisition of a majority stake in an Israeli engineering firm for $4 billion. More interestingly, Warren Buffett bought $1.53 billion of stocks, and sold $826 million of stocks. So what did he buy? and what did he sell?

During the previous quarter Warren Buffett bought large stakes in Wal-Mart (WMT), Anheuser-Busch (BUD), and Wells-Fargo (WFC). Since his purchases, both the prices of Wal-Mart and Anheuser-Busch drifted down slightly. Did Warren Buffett add to his positions in these stocks? Did Warren Buffett find something new to buy?

What did Buffett sell? During the previous quarters Warren Buffett reduced Berkshire's stakes in Gap, Iron Mountain etc. Has he sold more?

We don't know the answers to these questions, but GuruFocus will keep you informed. During 2004 Warren Buffett indicated that he could not find stocks to buy. Since then he seems to find a lot of ideas. Berkshire has seen its holdings in equities increased to the highest levels in its history, both in dollar amount and percentages.

Historical capital allocation of Berkshire Hathaway:

Historical Warren Buffett Capital Allocations

Excerpt from Berkshire's Cashflow Statement (Q1 2006):

    First Quarter  
    2006     2005  
Cash flows from investing activities:
Purchases of securities with fixed maturities
    (2,942 )     (1,491 )
Purchases of equity securities
    (1,529 )     (1,720 )
Sales of securities with fixed maturities
    792       890  
Redemptions and maturities of securities with fixed maturities
    2,725       954  
Sales of equity securities
    826       301  
Purchases of loans and finance receivables
    (105 )     (444 )
Principal collections on loans and finance receivables
    222       231  
Acquisitions of businesses, net of cash acquired
    (5,463 )     (191 )
Purchases of property, plant and equipment
    (747 )     (303 )
    83       117  
Net cash flows from investing activities
    (6,138 )     (1,656 )


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