Warren Buffett’s stock-buying spree slowed significantly in the second quarter, even during the big market correction, and analysts said the “Oracle of Omaha” could preserve capital for other uses. Berkshire Hathaway’s net purchase of shares fell to $3.8 billion in the second quarter from more than $41 billion in the first quarter, according to the conglomerate’s quarterly reports. Buffett’s relatively quiet activity may come as a surprise to some, as the S&P 500’s biggest one-quarter drop since March 2020 has created a good environment for bearish buying. After all, the legendary investor plunged into the market for a bargain in the first quarter when the S&P 500 fell just 5%. CFRA Research analyst Cathy Seifert said Buffett could manage liquidity needs before his deal with Allegany closes in the coming months. The conglomerate’s deal to buy insurance company Alleghany for $11.6 billion, or $848.02 per share, in cash is expected to close in the fourth quarter of this year. The acquisition would mark Buffett’s biggest deal since 2016. Seifert also expects Berkshire to increase its stake in Occidental Petroleum to more than 20%. Buffett has steadily increased his stake in the oil giant since March, giving Berkshire a 19.4% Western stake worth around $10.9 billion. Will redemptions pick up again? Berkshire could also save money to buy more of its own stock. The conglomerate said it spent about $1 billion on share buybacks in the second quarter, a slower pace of buybacks than in the first quarter, when the company repurchased $3.2 billion of its own stock. Now that Berkshire shares have become cheaper after the second quarter sell-off, the conglomerate may again ramp up its buyback activity in the next quarter. “We wouldn’t be surprised if BRK share buybacks continue in 3Q22 given the discount the stock appears to be trading at to its intrinsic value,” Brian Meredith, UBS analyst covering Berkshire, said in a note. . The conglomerate’s Class A stock fell more than 22% in the second quarter, and is now down nearly 20% from its all-time high on March 28. Stock buybacks generally depend on Buffett believing the stock is trading at a large enough discount to its intrinsic value and other uses of cash. Berkshire Hathaway Energy? Berkshire’s latest quarterly filing also revealed that Vice Chairman Greg Abel, Buffett’s potential successor, sold his 1% stake in the company’s Berkshire Hathaway Energy unit for $870 million. Berkshire now owns 92% of Berkshire Hathaway Energy, with the rest owned by the family of the late billionaire philanthropist Walter Scott, who died last September at the age of 90. If the Walter Scott estate wishes to liquidate its 7.9% stake, it would require nearly $7 billion, according to Edward Jones analyst James Shanahan. “I don’t know what they have in mind, but I believe Buffett would like to own all of BHE,” Shanahan said. Huge investment losses While Berkshire posted a 38% increase in operating profit, the conglomerate was not immune to the overall market turmoil with a whopping $53 billion loss on its investments during the second quarter. Buffett again asked investors not to focus on quarterly fluctuations in his stock investments. “The amount of investment gains/losses in a given quarter is generally meaningless and provides net earnings per share figures that can be extremely misleading for investors with little or no knowledge of accounting rules” , Berkshire said in a statement. Still, the pullback from his existing portfolio may have given Buffett pause, Seifert said. The bulk of the losses were in Berkshire’s largest positions, including Apple (loss of $34 billion on Berkshire’s position in Q2), Bank of America (loss of $10 billion), and American Express (loss of $34 billion). $7 billion). These positions have recovered part of the losses of the current quarter. “We believe a recovery in the prices of shares held by Berkshire reversed a substantial portion of the decline in book value in the second quarter,” Shanahan said.