Warren Buffett is investing more cash in the stock market today than at any point since the global financial crisis. Berkshire Hathaway logged $41.5bn in net stock purchases for Q1 2022. With the S&P 500 recently entering bear market territory, Buffett’s timing is noteworthy considering he was a net seller of stocks throughout 2021.
One quote in which the billionaire neatly summarises his timeless investment approach is to “be fearful when others are greedy and greedy when others are fearful“. With that in mind, let’s look at two stocks Warren Buffett has been buying this year and whether now is a time for me to be fearful or greedy.
A new Warren Buffett stock
Warren Buffett first acquired shares in Occidental Petroleum (NYSE: OXY) in 2019, but he’s considerably increased his stake since late February 2022. It’s a top 10 holding in Berkshire Hathaway’s stock market portfolio today.
In total, Berkshire owns 143m shares. It’s proved an excellent investment. The Occidental Petroleum share price has soared by 124% this year.
Occidental stock could by buoyed by a promising outlook for higher oil prices, at least in the short term. Brent crude is tipped to soar to from $119 to $140 per barrel over the coming months, according to the latest Goldman Sachs forecast. Berkshire’s investment gives Buffett exposure to this trend.
What’s more, the oil company looks reasonably valued to me with a price-to-earnings (P/E) ratio around 10.5. On the other hand, the stock’s dividend yield is less remarkable at 0.75%. Indeed, it’s worth noting Berkshire owns preferential shares that pay an annual dividend of 8%.
When it comes to my own portfolio, I’m wary of the risk that the stock price may have climbed to artificial highs following news of Warren Buffett’s investments.
An old favourite
Apple (NASDAQ: AAPL) is the top Warren Buffett stock. At nearly 43% of Berkshire’s entire portfolio, the US tech giant dwarfs the company’s other holdings. Owning a stake of 887m shares, Berkshire is Apple’s third-largest investor.
The Apple share price is down nearly 15% over the past six months. During this drawdown, Buffett has been adding to his existing position.
Apple’s most recent quarterly results are encouraging. Total revenue saw an 8.59% year-on-year increase to $97.28bn. The company generated over $28bn in operating cash flow and it returned nearly $27bn to shareholders during the quarter.
However, disruptions to global supply chains caused by lockdowns in China and the war in Ukraine are headwinds for Apple stock. So too are rising inflation rates across the world if cost-conscious consumers cut back on Apple products. The iPhone 14’s sales performance, following an anticipated release later this year, will be crucial.
Fear or greed?
There’s plenty of fear around at the moment. Gloomy predictions of global recessions make it easy to be bearish. Yet times like these often reward greed in successful stock market bargain hunters, demonstrated by Warren Buffett’s recent spending spree.
I won’t be buying Occidental or Apple shares at present for the reasons I’ve outlined above. Plus, I already own Berkshire Hathaway stock. Nonetheless, learning from Warren Buffett’s approach encourages me to seek out other long-term investment opportunities that align with my portfolio goals.
