Be fearful when others are greedy, and be greedy when others are fearful.
— Warren Buffett
Warren Buffett is putting his money where his mouth is.
While sinking markets and renewed fears of a global recession were enough to drive many out of equities in the third quarter, the Oracle of Omaha used this blood-in-the-streets scenario to his advantage.
According to a recent regulatory filing for the quarter ended Sept. 30, the world renowned investor put $23.9 billion to work during this period — his most substantial expenditure in 15 years.
Buffett has not traditionally been one to shy from the spotlight. However, in regard to his most recent shopping spree, the billionaire investor has been surprisingly coy. A considerable percentage of the nearly $24 billion could be attributed to the Berkshire Hathaway's Lubrizol acquisition, and Buffett's Bank of America preferred shares and warrants. In addition, however, the investor purchased nearly $7 billion in common equity.
The names of the companies that have received the most recent Buffett blessing, however, have yet to be released. The investor requested and was granted approval to temporarily withhold specifics. In the absence of concrete names, Buffett fans have been left to speculate.
Many have pointed out that Buffett appears to be expanding the reach of his legendary portfolio with this recent expenditure. With major slices of his portfolio dedicated to companies such as Coca-Cola, Wells Fargo and American Express, the performance of the Berkshire Hathaway portfolio has long relied heavily on the financial and consumer goods industries. The presence of industrials, however, appears to be on the rise.
The filing notes that the cost basis on companies designated as "commercial, industrial, and other," currently stands at more than $17 billion. In addition to noting that this marks a 62 percent increase over the course of the quarter, a Bloomberg report said this category has surpassed the cost basis of his investments in financials and consumer goods.
While Warren Buffett's investment preferences may be shifting, there is also the strong chance that his recent hires are helping to influence the investors buying decisions. Many have questioned whether it was the recent Berkshire Hathaway newcomer, Todd Combs, who convinced the Nebraska native to take on exposure to credit card giant Mastercard during the opening half of the year.
Whether Combs or fellow-newcomer Ted Weschler played a part in Buffett's buying frenzy remains up for debate. For Berkshire investors, what ultimately matters is whether Buffett's new purchases can help get his company's stock out of its rut.
Year to date, Berkshire is down over 5.5 percent, handedly underperforming the broad S&P-tracking SPDR S&P 500 ETF . The mood remained soured this week following the release of the company's shaky quarterly earnings. Despite beating analyst estimates, the company reported a notable decline in third quarter profits. Commentators have attributed this drop to the investor's derivative bets.
Long a proponent of the U.S.' economic recovery, Buffett has expressed his bullish views through various mediums including interviews and op-ed articles. However, with his most recent purchases, it is clear that his optimism is more than just rhetorical. Looking ahead, it will be interesting to see if the investor's new bets pay off.
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