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FirstFT: Quant funds snap up $900mn worth of Berkshire Hathaway shares

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Good morning. Hedge funds hoovered up Berkshire Hathaway stock in the second quarter, with DE Shaw, Renaissance Technologies and Bridgewater Associates buying millions of shares in Warren Buffett’s conglomerate.

The list of Berkshire shareholders adding to their positions was dominated by quant funds, with some of the best-known names in the industry collectively buying shares worth more than $900mn during the quarter, securities filings reviewed by the Financial Times show.

These computer-driven investment groups look for factors or trends to guide wagers, with some hoping to ride rising momentum and others targeting shares of companies that are less volatile than the broader market.

Berkshire meets many of the criteria for such funds, in part because its shares are relatively inexpensive based on its earnings compared with other companies. Value investing has been a winning trade this year, with investors buying up slower-growing but stable companies as interest rates have climbed.

“The primary factors quants look at [are] value and momentum, which is buying winners and selling losers,” said Adam Gould, director of quant research at Fundstrat Global Advisors. “Berkshire has looked favourable on both those metrics for some time.”

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1. UK fuel poverty to double without ‘immediate’ action The number of UK households in fuel poverty will more than double in January, to about 28mn people in 12mn homes, or 42 per cent of all households, unless the next prime minister takes “immediate” action to curb energy bills, a coalition of groups has warned.

2. UN inspects Russian-held nuclear plant in Ukraine The UN’s atomic safety watchdog inspected the Russian-occupied Zaporizhzhia nuclear power plant in southern Ukraine yesterday and said it would set up a “continued” presence at the site. The inspection followed several tense hours in which officials were delayed by gunfire from nearby battles.

3. New UK leader to face furious Number 10 staff Britain’s new prime minister will next week enter a demoralised Number 10, in which civil servants, facing an internal disciplinary procedure that could blight their careers for attending a lockdown-breaking gathering, are said to be “spitting blood”.

4. Apple accounts for 50% of US smartphones Apple has overtaken Android devices to account for more than half of smartphones used in the US — the iPhone’s highest share since it launched in 2007. About 150 devices using Google’s Android operating system, led by Samsung and Lenovo, accounted for the rest.

5. Starbucks names outgoing Reckitt Benckiser chief as CEO Laxman Narasimhan has been handed the task of executing a “reinvention” strategy designed by Howard Schultz, who returned in April to the Seattle coffee bean supplier he built into a global brand. The news came hours after Reckitt surprised investors by announcing that Narasimhan was leaving.

Have you kept up with the news this week? Take our quiz.

The days ahead

Economic data Eurostat releases the eurozone July producer price index, while Germany has trade figures for the same month. US non-farm payroll data are expected to show the economy added about 300,000 jobs last month, down from a five-month high of 528,000, with the unemployment rate remaining at a historically low 3.5 per cent.

Donald Trump rallies The former president will take to the stage tomorrow at a Republican rally in Pennsylvania in support of candidates Doug Mastriano and Mehmet Oz in their midterm election campaigns.

Gorbachev’s funeral Former Soviet leader Mikhail Gorbachev will be buried tomorrow at Moscow’s Novodevichy cemetery, the final resting place for hundreds of Russian dignitaries, alongside his wife Raisa, who died in 1999. President Vladimir Putin will not attend because of scheduling conflicts, the Kremlin has said.

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Chile constitutional vote Chileans will vote on Sunday in a referendum on adopting a new constitution, in the wake of protests in 2019, which would replace the charter enacted in 1980 by Augusto Pinochet’s regime.

What else we’re reading and listening to

Storm clouds gather over Prudential’s pivot to Asia In the past three years, the £24bn life insurer has shed its European business, spun off its US operations and slashed its UK headquarters, relocating all senior management to Hong Kong. But an economic downturn, geopolitical instability and pandemic restrictions are weighing on the prospects of its core markets.

Line chart of Share-price % change showing Prudential has lagged behind rival AIA this year

‘How history caught up with my Russian academic friends’ “When I think of the situation of my friends in Russia, of the future they have been denied by Putin’s war, I feel shame, frustration, anger and most of all sadness,” writes British historian Orlando Figes on how the war in Ukraine has affected the intelligentsia of Moscow and St Petersburg. “They all, I’m sure, abhor this war — even if they do not dare say so in their messages to me.”

The violent backdrop to Swedish elections Sweden has gone from having one of Europe’s lowest rates of deadly shootings per capita to the highest in just a decade, with this year on track to be a record. Law and order, once dismissed as a gang-on-gang phenomenon confined to immigrant-heavy poor suburbs, is among the top priorities for Swedish voters.

Ai Weiwei’s tribute to ‘ultimate freedom’ The centrepiece of Chinese artist Ai Weiwei’s new solo show in Venice has been assembled from more than 2,000 pieces of black Murano glass fashioned to replicate bones, organs and surveillance cameras. The result is a hypnotic, hanging ossuary that begs us to fight for our freedom before we die.

India’s bid to join the semiconductor race India wants to take a step up the manufacturing value chain, with a high-stakes bid to begin making semiconductors. But to have any chance of achieving its goal of cracking the lucrative chipmaking market, it will need to move exceptionally quickly — and decisively.

Science

The headlines this year have been dominated by war in Europe, soaring inflation and worries about climate change. But there has also been a series of remarkable breakthroughs, from microbiology to astronomy. The Financial Times science desk puts together the top five stories of the year.

A young, star-forming region called NGC 3324 in the Carina Nebula, as captured by the newly operational James Webb Space Telescope
A young, star-forming region called NGC 3324 in the Carina Nebula, as captured by the newly operational James Webb Space Telescope © Nasa, ESA, CSA, STScI

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