According to Bloomberg’s June 2016 ranking* of the richest people in the world, Warren Buffet came in third with only Bill Gates (#1) and Amancia Ortega (#2) ahead of him in wealth. Gates of Microsoft fame is valued at a net worth of $85.9 billion USD, Ortega of the Zara Spanish clothing empire has holdings valued at $75.8 billion USD and Buffet is valued at a ‘mere’ $68.2 billion USD in wealth. It is no surprise that Warren Buffet was not pleased with the election results when his choice, Hillary Clinton, lost to Donald J. Trump, but that isn’t holding him back from increasing his (or Berkshire Hathaway’s) holdings.
Buffet Goes on a Stock Buying Spree
Buffet and his two top men invested to the tune of $12 billion USD since the election, an unprecedented amount of money to be invested in stocks within such a short period of time, even for Buffet. In fact, that amount is equivalent to what Berkshire Hathaway had invested, in total, over the past three years! To have bought stocks for his funds in three months what he had previously invested in three years appears to be indicative that he is confident the newly inaugurated president will, indeed, grow the economy as he had promised on the campaign trail.
A Game Changer for Institutional Trading?
Whenever there is a change in market movement, you can always find players like Buffet and Gates at the head of the line. Now it seems as though investors are being urged to buy with the Volatility Index, because along with a surprise Trump win, anything can happen with a market that’s down 11% and nowhere to go but up! With his newly acquired $12 billion in stocks for the Berkshire Hathaway funds, many are asking if this is a game changer for funds trading. Will other funds follow suit, immediately increasing their holdings as well? If this pattern spirals out to other institutional traders, it is likely that funds managers and traders in the UK will catch the trading bug. Buffet hasn’t missed yet so there must be something he ‘feels,’ and he is usually spot on the money – $68.2 billion worth of accurate predictions.
Already UK Brokerages Are Feeling the Push
The article syndicated by Reuters has already gone viral and is being picked up by news outlets around the globe. It will be interesting to follow Berkshire Hathaway in the coming months to see how the addition of these funds performs. Hi tech platforms such as those offered on UK brokerage ETX Capital will enable traders to access data in real time. Both BRK.A and BRK.B on the NYSE should reflect these newly acquired securities in the very near future. What will the inclusion of these yet unknown stocks do to an already successful conglomerate? Only time, and of course real-time data, will tell.
So, What Did Buffet Buy?
At the time of the Reuters publication, it was still unknown exactly what stocks Buffet bought up for Berkshire Hathaway, but he did allude to the fact that Todd Combs and Ted Weschler, his two deputies, had probably also bought some up for their own private portfolios. As noted in Reuter’s release, the rapidity at which Berkshire Hathaway is buying up stock is quite unusual, so either Buffet has a high level of confidence going forward that those companies will perform well, or he has overcome his disappointment that Trump won the election and now has high hopes for the economy.
Even so, at this time no one knows exactly what those stocks are, but to inspire Buffet like this is indicative of good things to come. While he doesn’t think Trump will grow the economy as high as his promised 4%, Buffet believes he will achieve 2% growth and that, in Warren Buffet’s view, is still a very good thing. His words exactly stated that “2% will provide miracles.” With all the current political unrest in his home country, and as the world watches, one can only hope that miracles do come true.
*Update: As of February 1, 2017, Bloomberg reported that Warren Buffet edged out Ortega and is now in 2nd place to Bill Gates while Ortega has slipped to 4th place with Jeff Bezos now in 2nd place, valued at $72.1 billion to Buffet’s $73.6 billion and Gates’ $84 billion. While both Gates and Ortega lost in net worth, only Buffet climbed by almost $5 billion in a 6 month period. It appears as though anyone wanting a leader to follow should look into Buffet. All eyes are now on Berkshire Hathaway and those newly-acquired stocks!