Warren Buffett has been a net seller of stocks for seven consecutive quarters. He has also built Berkshire Hathaway's cash, cash equivalents, and short-term investments to nearly $277 billion -- the largest cash stockpile in the company's history.
Has the legendary investor thrown in the towel on the stock market? Not completely. Buffett just bought shares in seven stocks. I think one stands out as the best of the bunch.
Adding more
Buffett added to Berkshire's existing positions in five stocks in the second quarter of 2024. I wasn't surprised that Occidental Petroleum(NYSE: OXY) was one of them. Buffett is a big fan of Occidental and the company's CEO, Vicki Hollub. The stock is Berkshire's sixth-largest holding.
Berkshire's purchase of over 1.1 million shares of Chubb (NYSE: CB) in Q2 wasn't a shocker, either. Buffett began buying the insurer last year without revealing the identity of the stock. He has invested aggressively in Chubb in recent quarters. It's now the ninth-biggest position in Berkshire's portfolio.
Buffett's three other additions to existing positions in Q2 share a common denominator. He increased Berkshire's stakes in Liberty Media Corp Series A(NASDAQ: LSXMA) and Liberty Media Corp Series C(NASDAQ: LSXMK). Buffett also bought another 96.2 million shares of Sirius XM Holdings(NASDAQ: SIRI), boosting Berkshire's position in the satellite radio operator by more than 262%. Liberty Media owns over 83% of Sirius XM's outstanding shares.
New positions
Ulta Beauty(NASDAQ: ULTA) was the biggest new position for Berkshire Hathaway in Q2. Buffett and his team bought more than 690,000 shares of the cosmetics retailer worth roughly $266 million at the end of Q2.
The purchase of Ulta looks like a classic buy on the dip. Ulta stock has fallen around 20% year to date, and the decline has been largely due to the company's disappointing full-year guidance. Ulta CEO Dave Kimbell warned that consumer spending on cosmetics has slowed.
Buffett also initiated a new position in Heico(NYSE: HEI) in Q2, buying more than 1 million shares of the aerospace and electronics company. Unlike Ulta Beauty, Heico has delivered strong gains in 2024 with its stock soaring close to 35%.
Business is booming for Heico. The company reported record revenue and earnings in its fiscal 2024 Q2 results announced in May. Acquisitions continue to be a key growth driver for Heico.
The best of the bunch
If you're an income investor, you might be drawn to Sirius XM's juicy forward dividend yield of 3.6%. The company's dividend payout ratio of 31.5% is also low, indicating financial flexibility that could enable it to increase the dividend.
If you're a value investor, the two Liberty Media stocks could be more to your liking. Both trade at a forward earnings multiple of under 6.3. Analysts surveyed by LSEG also project that Liberty Media will deliver strong earnings growth over the next five years.
However, I think Occidental Petroleum is the best overall stock among Buffett's Q2 buys. The stock is attractively valued with a forward earnings multiple of around 14.5. It offers a modest forward dividend yield of over 1.5%. CEO Hollub predicts an oil supply shortage by the end of next year, and, if she's right, the stock could soar in the not-too-distant future.
Buffett has praised Occidental's pioneering work in developing carbon capture and storage technology. If the company is successful on this front, it could be a big winner for investors for years to come.
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Keith Speights has positions in Berkshire Hathaway and Chubb. The Motley Fool has positions in and recommends Berkshire Hathaway and Ulta Beauty. The Motley Fool recommends Heico and Occidental Petroleum. The Motley Fool has a disclosure policy.
