What Is Buffett Up To?

There’s been a lot of speculation on the underlying reasons behind Buffett’s insanely aggressive continued purchases of OXY. 

SaaS-bois are out here doing FCF multiples on oil companies.

Some investors are talking about how the speed of the EV and renewables transition is being overestimated and Buffett is just being a classic value investor. Then there’s ESG, labor shortage, capital cycles…

War broke out on Feb 24 and Buffett started buying hand over fist about a week later and hasn’t stopped.

Weschler said on a recent podcast that he, Combs and Buffett often sit around and shoot the shit over quarter pounders. He said COVID was tough for them to handicap because they had no precedent for it that they could look to in order to have a view of what to expect. 

“We looked at each other and just said ‘Wow, just haven’t seen anything like this. Not sure how it’s going to play out’ ”

In contrast, he said about the war, 

“That’s the sorta thing we’re in a better position to assess because there have been similar things that have happened…that you can say…probability adjusted, what sort of outcomes  could you have. And we’ve made some public announcements in the last 30 days of things that we’re investing in.”

Seems to me that Buffett is just trying to protect himself in case Russia decides to “October 1973” us. If not that, then 1979 and post 2001 are probably reasonable precedents of what he may expect.

He’s not really being contrarian at all.

Though I certainly hope not, it is possible that he is, as usual, doing what will seem most obvious to all of us with hindsight.