If you want to invest like a professional, it seems that there can be no better way to approach investing than following the very best at the job. The Oracle of Omaha, Warren Buffett, is considered the most significant investor of all time.
The seemingly prophetic market mover is famous for making long-term investments that have been exceptionally profitable for his investment portfolio. One of the ideal strategies to work out for Buffett is his ability to capitalize on market volatility to buy on weakness and hold on for the long haul to see his investments provide mammoth returns.
It has been almost four years of total inactivity from Berkshire Hathaway that had everybody confused. The stock markets had been performing exceptionally well, making sense to be wary of purchasing when the market is arguably overvalued.
However, during the latest market volatility, Buffett has remained quiet. It is in stark contrast to his eagerness to pounce on beaten-down stocks a decade ago during the economic crisis. During the recent few months, Buffett has sold more shares than he has bought.
Buffett recently let go of airline stocks, admitting it as a mistake to invest in the sector. Warren Buffett may have his reasons for remaining inactive when it comes to buying more shares right now. Perhaps he knows and expects something that we do not understand yet.
Let’s take a look at one of his most recent acquisitions from the Canadian stock market and how it is faring.
Suncor Energy (TSX:SU)(NYSE:SU) is not a stock known for substantial volatility. There have been price swings from time to time over the years, but the recent most upswing has been surprising. Like its peers, Suncor became beaten down due to the oil price crisis and the pandemic working in tandem.
The broader stock market has witnessed a rally since hitting the market low in March 2020. At writing, the S&P/TSX Composite Index has recovered 42.27% from its 2020 bottom. Suncor has also enjoyed a period of relief. The stock is up by almost 90% from its March 2020 low.
The energy sector has experienced devastating blows along with the rest of the world due to the pandemic. When the new OPEC deal was signed, there was already a pandemic raging worldwide, which decimated the demand for oil. Returning to higher prices per barrel, the need for oil dropped drastically.
Recent weeks are seeing the situation improve for energy companies to a certain degree. A few countries have begun to open up air travel. As air travel increases and more people start to travel, there will be a higher demand for oil. While we are nowhere near the previous levels of oil demand, the incremental requirement for more oil seems to be going up.
Despite the recent climb by the integrated energy company, it is essential to remember that Suncor is still almost 40% below its 2020 high. At writing, Suncor is trading for $28.43 per share, and it is paying its shareholders their dividends at a 2.95% yield.
Like many other stocks, Suncor seems to be on the path to recovery. It is still disturbing not to see Warren Buffett act on the market weakness in recent months to purchase new stocks or entire companies. It remains to be seen how the Oracle of Omaha will proceed with the developing situation.
One of his recent acquisitions, Suncor, is doing better, despite being severely beaten down over the past several months. If you have some cash that you can spare, I would suggest considering Suncor shares. The stock is on an upward trend, but it is not yet close to its high at the beginning of the year. You might still get a good deal out of it.
If you already own shares of the stock, I would suggest waiting to see the moves that Buffett makes before making drastic decisions regarding your investment portfolio.
Speaking of Warren Buffett…
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares).