“Be fearful when others are greedy, and be greedy when others are afraid,” as Buffett once famously stated. He’s been living his words lately. While many investors are frightened with the stock market falling, Buffett has been greedily buying shares in firms he likes.
In the first quarter of 2022, Buffett and the firm’s investment managers acquired eight new equities based on recent Berkshire Hathaway regulatory filings that revealed their equity positions. The following are his finest purchases.
Best of the bunch
Which of these new stocks is the top of the bunch, and which should you avoid? If we judged solely on year-to-date results, Oxy would emerge as the winner. The oil and gas firm’s stock has increased by close to 120% thus far in 2022.
However, Buffett and his stock picking team didn’t base their selections on short-term stock performance. Indeed, half of the new Berkshire investments have underperformed so far in the year.
It’s more likely that Buffett would recommend analyzing the long-term business prospects and pricing of each firm. Based on these criteria, I believe two of Berkshire’s newest shares stand out.
McKesson has a long-term corporate strategy. The firm delivers prescription medications and surgical procedures to hospitals across the country. It is also in the business of delivering prescription technology support. For years, there will be an increasing need for McKesson as a result of growing demographic patterns among the elderly.
With a P/E of less than 14, the shares are attractively priced. Buffett’s best-performing stocks for 2022 so far have included McKesson’s stock, which has increased by more than 30% this year, making it one of his top performers of the year.
Markel is a “baby Berkshire” in every sense of the word. However, the firm has its own niche. It specializes in providing unusual insurance to individuals with risks that conventional insurers refuse to cover.
Markel is a reinsurance company, like Berkshire. These businesses produce a lot of cash flow, which the firm seeks to invest in additional publicly traded firms. Markel’s portfolio, on the other hand, has a greater focus on growth than does Berkshire’s.
According to forward earnings multiples, the stock is a touch more costly than the S&P 500. But when growth prospects are factored in, Markel appears to be a bargain with a price-to-earnings-to-growth (PEG) ratio of just 0.91.
Think like Buffett
Among Buffett’s most recent acquisitions, my favorites are McKesson and Markel, but you may choose one or more of his other new stocks instead. Alternatively, you may like all of his selections.
Every investor, however, should have the same attitude as Buffett. Don’t be deterred by others’ fear and panic from looking for possibilities. Whether or not you invest in the same companies that Buffett does, you’ll probably do well over time by thinking like him.