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The stock market rout this year has clobbered investors, with many of the world's big fund managers striking out and moving to the sidelines. But that hasn't been the case for one of the most well-known investors, billionaire Warren Buffett. The chief executive of Berkshire Hathaway has spent tens of billions of dollars this year on stocks, snapping up shares of Citigroup, HP, Chevron, and Occidental. He also clinched a $12bn deal to buy insurer and toy manufacturer Alleghany.
The new bets mark a return to Buffett's dealmaking roots, which he had largely put on ice after the pandemic first rocked the US. It was a move that drew criticism from shareholders as its cash pile surged. Buffett was deeply worried about the initial downturn sparked by the coronavirus and sold stakes in US banks and airlines, fearing large losses for the businesses. That pessimistic view meant Buffett passed on some of the best deals struck in 2020 when other big money managers, including Apollo and Blackstone, went to work lending billions of dollars to companies in trouble.
By the time the clouds began to clear Buffett had missed out. Stocks were rallying aggressively, and the returns no longer looked appealing. Buffett at one point warned that the market was, quote, 'almost totally a casino as it skyrocketed.' Instead of diving in he stuck to his playbook while he sat on the sides spending money on one thing he thought was undervalued, Berkshire Hathaway's own stock. The company's cash pile was near record territory when the value of other stocks began to crater.
It gave Buffett the firepower to go on a buying spree for bargains. In April, he said that during the market sell-off this year, quote, 'a few stocks got very interesting to us and we also spent a lot of money.' His pace of dealmaking has slowed as the market has rebounded this summer. But with the S&P 500 still in a bear market it's possible there are other deals in the wings for Buffett.