The previously released third-quarter position report of Buffett's listed companies showed that Ba Lao was still net selling shares in the third quarter-- US $1.9 billion, plus 3.9 billion of net sales in the first quarter and 1.1 billion in the second quarter. So far this year, Pakistan has "reduced" its holdings by about 7 billion US dollars. It is estimated that with the release of the fourth-quarter report in the future, the reduction of holdings for the whole of 2021 will be even higher.

Buffett's third-quarter position report on November 15, US Eastern timeThe "details" were further announced, and as a result, in a large number of reductions and "doing nothing", Ba Lao only increased his holdings in one company.。

Bart, what did you see?

01、Third quarter report "details"

Judging from the operation of Balao in the third quarter, it is mainly to continue to reduce positions:

Of the 43 stock positions, 7 reduced their positions.

Two new entrants (the position is very small, there are only more than 500 million in total)

Only one stock has been added: Chevron Corp；

The rest "sit tight".

Balao's "work habit" is to first pay attention to what he has on hand, to see if there are any latest changes, to decide whether to stay, go or add, and then to see if there are any new opportunities outside.

From the point of view of the overall reduction of positions, Ba Lao actually conveyed the concern that some of his opponents' positions were greatly overvalued: those who reduced their positions generally reduced their positions by a large margin; at the same time, only one opportunity to increase their existing positions was found: Chevron Corp.

02、What did Barry see?

After deciding to increase the position, the amount of increase actually depends on the market situation: if you buy a little, the market price will go up quickly, you will not be able to buy too much, but if you buy, there will still be downward pressure on the price, but you can increase it a lot.

Chevron Corp offered such an opportunity in the third quarter:Buffett added nearly $3 billion to his position in one breath.。

Chevron Corp, a traditional oil company, was one of the "seven sisters" split from the Rockefeller oil empire. As a fossil energy, most of the demand for oil is in the automobile and transportation industry. in the current upsurge in electric cars, did Buffett "go against the trend" and make the same mistake as buying Berkshire, a textile sunset company?

Ba Lao put all his holding company into Berkshire and kept Berkshire's name forever, in part to remind himself: don't make the same mistakes as you did then.

But the current Chevron Corp is not the Berkshire of that year, it provides a very good "hedging" plan.

First of all, Chevron Corp is a very active member of traditional US oil companies in investing in new energy: it has recently been announced that it will triple its investment in new energy in the next eight years to US $10 billion. This gesture ensures that Chevron Corp is likely to ride the new energy winds that blow from time to time at some point in the future.

In addition, the most important thing is that Chevron Corp's cash flow is excellent.

1. Chevron Corp paid an annual dividend of 6% when Buffett built his position; this is a very competitive cash ratio.

two。 More importantly, Chevron Corp has the ability to maintain this ratio in the foreseeable future. (at present, the dividends of US stocks all have a tendency to become bonds. As long as enterprises do not fall into heavy losses, dividends will be paid once a quarter, just like the payment cycle of US debt, and it is very stable.) according to Chevron Corp's calculation (Ba Lao must have verified this, otherwise he would not hastily increase his position), when the price of crude oil is 60 US dollars in the future. It will generate $25 billion in "excess cash" returns for shareholders over the next five years.

The above "promises" have two bright spots:

1) the cash return of $25 billion is based on the price of crude oil of $60 per barrel. If the oil price is higher than $60 during this period, the actual cash return will only be higher.

2) the 25 billion cash is called "excess" cash because it does not include dividend cash and $10 billion investment cash; in other words, after a 6 per cent annual dividend and a huge amount of new energy investment, there will be so much cash left.

Buffett's position in Chevron Corp cost about $100 and a market capitalization of $200 billion. "excess cash" of $25 billion over five years means at least $5 billion a year, or 2.5 per cent, plus a dividend of 6 per cent of the price at the time, an annual return of 8.5 per cent. This does not include the implied "option" price of new energy.

Munger made it clear before that Berkshire likes companies with strong cash flow, not those that only have paper profits and turn them into fixed assets at the same time. And Buffett's position has been in this way "from ancient times to the present"-- which is why Berkshire "missed" Tesla, Inc. and Amazon.Com Inc because their cash flow was too poor, and now Amazon.Com Inc has been added. to a large extent, it is also because Amazon.Com Inc has basically completed his monopoly and entered a stage that can provide stable cash flow.

The size is already so large that it is king to be able to steadily eat the "interest rate gap" between financing costs and investment returns.