What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing unless you've been living under a rock. There are two things you know about the world today, russia is invading ukraine and stocks around the world are crashing. The invasion is the biggest military conflict between two sovereign nations. In recent memory.

It has sparked fears about energy security in the western world, especially europe, where 40 of their gas comes from russia. Since biden announced a u.s ban on russian oil imports, oil prices have skyrocketed to the highest level. Seen since 2008, that's caused strain on the us consumer at the gas pump with the national average price per gallon, topping four dollars. The effects on supply chains in all sectors of the economy have severely hurt american corporations.

So it's only natural that such a significant geopolitical event has wreaked havoc on american markets even before the actual invasion began. The stock market was already having its worst stretch since the beginning of the pandemic. Now the nasdaq is down more than 20 percent. Just a few days ago, at the same time, some agile professional money managers at the world's most successful hedge funds are using this market crash as an opportunity to cash in big time.

For example, warren buffett has bought billions of dollars worth of oil stock since the invasion began. He, along with others, have made profits estimated to be worth hundreds of millions or even billions of dollars by positioning themselves to benefit from skyrocketing energy costs. In this video we'll look at how the billionaire investors, like warren buffett and leon cooper man, are positioning themselves around this market crash and what they have done in market crashes of the past. Keep in mind that we are not financial advisors.

This video is, for entertainment purposes, only be sure to consult a professional before making any investment decision by and large the biggest trade for hedge funds of the past few months is undoubtedly oil. On march 17th, cnbc reported that warren buffett had bought an additional billion dollars in the oil company occidental petroleum, that's after having already bought billions of dollars of the company previously, since the invasion began, and it brings his ownership stake up to a total of about 17 Percent of the company, so what's so special about occidental, they find and extract oil to be made into things like gasoline diesel, fuel and jet fuel. They also have a relatively smaller chemical manufacturing business when the us and other nations announced the ban on imports of russian oil. The reduced supply greatly improved the prospects of occidental's revenue and profit because they get the majority of their revenue from selling oil.

Their revenue is roughly proportional to the prevailing oil price. On top of that selling oil at higher prices doesn't increase the cost of producing the oil. The result is that when oil prices rise, the profits of oil producers rise much more so on a percentage basis, but rising oil prices isn't the only macro trend acting as a tailwind to occidental petroleum. They also have a huge amount of debt from years, not too long ago, when the company wasn't doing so well counter-intuitively.

This is actually a huge positive for occidental, with soaring inflation and expectations of inflation to rise even further in the coming years. The real value of debt goes down, in other words, occidental petroleum has to pay a fixed dollar amount of interest on this debt, but that fixed amount doesn't increase with inflation. So, in real terms, high inflation reduces their debt without them having to do anything in their latest quarterly report. Occidental reported 30 billion dollars of long-term debt, which is more than their market.

Cap was just a few months ago, so they are a huge beneficiary of today's high inflation environment. In addition to warren buffett, oil companies are well liked by the top hedge fund managers around the world. According to morgan, stanley's prime brokerage division, hedge funds bought more energy stocks than any other sector last month. As of the time of recording this, video hedge funds as a whole have their highest exposure to the energy sector in years.

Leon cooperman, the billionaire new york hedge fund manager, who founded omega advisors, also recently said that he thinks oil stocks are still cheap relative to commodity prices. His favorite stocks within the sector include tourmaline oil and paramount resources, so at least according to him, the oil trade might still not be over another highly followed hedge fund manager. Dan loeb of third point is also betting, big on energy in his latest sec filing for the fourth quarter of 2021. His biggest addition to his portfolio was archaea energy, which is in the business of natural gas production.

So, at least for now, energy has been the biggest play for professional money managers during this market correction. But what about past corrections as the market was crashing at the beginning of the pandemic? Many of wall street's top hedge funds, were aggressively buying high beta stocks, for example, in the first quarter of 2020, melvin capital increased its exposure to amazon by more than a third of a billion dollars by far the biggest increase in their portfolio bill. Ackman's hedge fund pershing square also used to drop in stock prices to load up on more shares of their favorite stocks. They only sold shares in one of their positions chipotle during that quarter.

The next quarter they continued their net buying, although, as stock prices rebounded, their buying did decelerate d1 capital. Another top hedge fund also used a pandemic to load up on risky stocks. They bought millions of shares of the company's hardest hit by the pandemic like disney hilton and las vegas sands, as well as technology stocks like facebook, google and alibaba. You can view all these holdings by using the fun tracker page on our new website at wallstreetmillennial.com or by directly looking up the 13f filings on the sec's website.

Trades like these that took advantage of the depressed stock prices allowed hedge funds to fully ride the markets. Come back later that year, by the end of the year, hedge funds in aggregate were up more than 10 percent, their best performance in decades. Another example of a recent market correction that perhaps wasn't as unique as the coronavirus crash was in late 2018.. Over the course of four months, the s p dropped 17 percent.

Many hedge funds also used this opportunity to add more shares of their favorite stocks. For example, ray dalio's hedge fund bridgewater associates bought millions of shares of southwestern energy, general, electric u.s, steel and other industrial and technology companies. When the overall market rebounded more than 10, the following quarter bridgewater was able to increase the value of its portfolio, as reported in sec filings from 10 billion dollars to almost 16 billion dollars. Let's look at one more recent example: in the second half of 2016, the market went into a temporary correction, with the s p bleeding out more than 10 percent over the course of six months again, many hedge funds used it as a buying opportunity and increased.

The number of shares that they owned, even as the value of those shares, was dropping. For example, davidson kempner capital was a big net buyer in the fourth quarter. On the buying side, they added about 35 million shares of the top three stocks on the selling side. They only sold about 20 million shares of the top three sales, so even as the overall value of their portfolio was dropping with the stock market, they were keeping their exposure to their favorite stocks roughly, even by buying more shares.

However, this doesn't mean that the smart money on wall street always buys on every market correction ray dalio's bridgewater was a huge net seller. At the start of the pandemic selling more than 10 million shares in a single holding alone. They only bought additional shares in a few different holdings and their buying totaled. Less than 4 million shares.

As a macro investor ray dalio thought that the economic consequences of the pandemic would be severe and prolonged and did not have confidence in a rebound of stock prices. He ended up being wrong and his hedge fund was one of the worst performing hedge funds in the world in 2020. So over the last three market corrections, it seems that, with some notable exceptions, many of the world's top hedge funds tended to buy the dip, or at least they didn't sell in droves when their favorite stocks went down. During the most recent correction, many of the billionaire investors are taking advantage of the macro trends of inflation and skyrocketing energy prices to load up on the beneficiaries of those trends.

However, it's also important to remember that what happened in the past is not a guarantee for what will happen in the future up until this point buying the dip on any significant market corrections ended up repaying investors handsomely, but there will come a day when that strategy Doesn't work and when that happens, it won't matter what the hedge fund billionaires did in the past. Alright guys that wraps it up for this video. If you enjoyed this content, make sure to smash the like button and subscribe. So you don't miss future videos.

In the meantime, thank you so much for watching and we'll see in the next video wall street millennial signing out.