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A little over a month ago Warren Buffett, the world’s foremost investor, announced that he wants to buy back an unlimited number of shares in his own company, Berkshire Hathaway (NYSE: BRK-A, NYSE: BRK-B) – a promising sign for both Berkshire and the financial markets as a whole.
As it turns out, Buffett’s investment in his own company was just the tip of the iceberg. Berkshire Hathaway invested a whopping $23.9 billion in the third quarter – the most money Buffett’s company has invested in the financial markets in at least 15 years.
Berkshire’s third-quarter spending spree included $7 billion in equity securities, or nearly twice the $3.62 billion it invested in the second quarter; $5 billion invested in shares of Bank of America (NYSE: BAC); and a 62 percent increase in its commercial, industrial and “other” stockholdings. Berkshire also bought Lubrizol Corp., a specialty chemicals manufacturer, for $9 billion. Add that to a company whose portfolio already includes soft-drink giant Coca-Cola (KO), top U.S. home lender Wells Fargo (NYSE: WFC), American Express (NYSE: AXP), Procter & Gamble (NYSE: PG), MasterCard (NYSE: MA) and Dollar General (NYSE: DG), among other positions.
In an article last Wednesday, Daily Profit editor Ian Wyatt told our readers to “Listen Up When Buffett Says to ‘Buy Berkshire’”. Ian wrote that any time Buffett spends aggressively, investors should pay attention.
“In addition to telling investors that Buffett thinks his stock is a steal at current levels, this announcement tells us one more thing: Buffett doesn't foresee a devastating double-dip recession,” Ian wrote. “If he thought the global economy was on the verge of collapse, he wouldn't be aggressively making new investments today, since lower prices would prevail in the future. This should be welcome news to investors who are ‘long’ stocks, including Berkshire.”
Like his buybacks in his own company’s stock, Buffett’s willingness to spend freely in the quarter that ended on September 30 should be a telltale sign for investors. If the most successful investor in history sees so much value in the market during a quarter in which the S&P 500 fell 14 percent, then it should show that it’s safe for others to jump in the pool – regardless of the daily doom-and-gloom news coming out of Europe.