Buffett Continues to Avoid Long-Term Bonds
Berkshire's longstanding aversion to fixed-maturity investments has not changed in response to higher interest rates.
Berkshire Hathaway reported third quarter results over the weekend. I wrote a brief article yesterday containing an overview of the quarter. In the past, I have typically published a long article discussing selected aspects of Berkshire’s results in greater detail. This quarter, I’m writing a series of shorter articles instead.
Analyzing a conglomerate as large as Berkshire can be a formidable task. Sometimes a formidable task is best approached in smaller pieces. This article is an analysis of Berkshire’s portfolio of marketable securities with a focus on the allocation to longer-term bonds. Apparently, higher interest rates have not been sufficient for Warren Buffett to reallocate funds from short-term treasury bills to longer term bonds.
Warren Buffett’s tremendous success over seven decades has long attracted the attention of investors who hope to either copy his moves or to gain insight into his views regarding opportunities in financial markets.
Most investors focus on Mr. Buffett’s moves in the stock market. Much information is available regarding Berkshire’s holdings of stocks traded on exchanges in the United States since regulations require the company to file 13-F reports every quarter. In certain cases where Berkshire owns a large percentage of a company, such as Occidental Petroleum, investors learn of Mr. Buffett’s activities within a few days. The temptation to coat tail can be overwhelming for many traders and investors.
Investors are also interested in whether Berkshire is a net buyer or seller of stocks in a given quarter. This information can be derived from Berkshire’s cash flow statements. Berkshire provides annual cash flow statements as well as year-to-date cash flow statements in quarterly reports. This information is summarized below: