Last week, I wrote about one of my favorite topics: Warren Buffett.

It couldn’t have been better timing. You see, Buffett is having another nice moment in the sun. As many high-growth tech names have fallen back to earth, his investing approach has once again been vindicated.

Will we ever learn?

In that piece, I specifically touched on what we can learn from Berkshire’s insurance operations – and how investors would be wise to add a nimble insurance name or two to their portfolio.

We all know that Buffett is known for his long-term approach. But this week we learned that Berkshire scored another big win, albeit one of a more short-term nature. Below, I discuss what happened — as well as some news you may have missed about the megadrought in the Southwest (and how we can profit)…

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Another Big Win For Buffett

Score another one for Buffett. Berkshire Hathaway (NYSE: BRK/B) recently released its 13F filings for the fourth quarter of 2021 with the Securities and Exchange Commission. And since this is publicly available info, we got a chance to take a peek at what Buffett & Co have been up to over the past three months…

We may dive into more of Buffett’s moves later, but one nugget in particular stood out. It turns out that he picked up close to $1 billion worth of video game company Activision Blizzard (Nasdaq: ATVI) during the quarter.

Then, as you may have read, Microsoft (Nasdaq: MSFT) came calling.

Now, before I go any further, I want to address something I found a little frustrating. If you spend any time on Twitter following the financial news like I do, you may have seen a few people raising their eyebrows due to Buffett’s friendship with Microsoft co-founder Bill Gates.

I wouldn’t pay any mind to those for one second. Gates has been out of Microsoft for years – he’s not even close to the day-to-day operations. Besides, why now, at the age of 91, would Buffett do anything untoward with such a paltry position in a $331 billion portfolio?

As the Oracle himself one famously said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

Anyway, Activision has been plagued by a number of delays with some tentpole video game titles, not to mention a nasty lawsuit alleging gender discrimination and a toxic work culture.

That was enough to send ATVI shares down to the mid-$50s after reaching as high as $103 in January.

But as we’ve pointed out before in these pages, video games are big business. Bigger than Hollywood, in fact. And it’s only going to get bigger…

Berkshire saw value here – or to be more precise, it’s likely that one of Buffett’s lieutenants, Ted Weschler or Todd Combs, saw the value.

So did Microsoft, especially when it came to bolstering the X-box console and its video game publishing efforts. According to the offer terms, MSFT will pay $95 per share, an all-cash deal valued at $68.7 billion.

Shares of ATVI have popped to about $81 as I write this – giving Buffett a quick gain of roughly 22%. But that also means there’s still some meat left on the bone if and when the deal is consummated.

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The Worsening Megadrought, Our Water Prediction, And How To Invest In The Solution

In case you weren’t aware, much of the southwestern United States has been in a drought for the past two-plus decades. And the situation is getting more and more dire by the day.

According to an article in The Washington Post, a new study in the journal Nature Climate Change shows just how bad it is.

I’ll give you a hint: it’s really bad. As in the driest period of the past 1,200 years bad. Here’s more from the Post:

“The double whammy of searing heat and persistent drought in recent years reflects the steady increase in global temperatures brought on by the burning of fossil fuels. The authors attribute 19 percent of the severe 2021 drought, and 42 percent of the extended drought since the 21st century began, to human-caused climate change.”

Earlier this week, my colleague Nathan Slaughter wrote about some of the ways you can invest in water – or water infrastructure, to be specific. As usual, his timing couldn’t have been better. (I highly suggest you go back and read that piece for more background, as well as ideas to invest.)

But Nathan isn’t the only one of our analysts who has his sights set on water. In fact, my colleague Jimmy Butts talked about water in his annual report of investment predictions for 2022.

Here’s a bit of what he had to say…

Few Americans realize what a luxury it is to turn on the faucet for a glass of clear, clean, cool water.

But not everyone is so lucky… even folks in America.

You might recall the water crisis in Flint, Michigan, that surfaced in 2014. Over 100,000 residents were potentially exposed to high levels of lead in the drinking water.

Then there was the water crisis in California… thanks to a prolonged drought, the state announced its first-ever mandatory water restrictions. And that doesn’t even touch on the fact the state has its own problem of getting clean, safe drinking water to hundreds of thousands of its residents.

And this is only a couple of isolated examples in the United States. You look at this from a global perspective and it’s easy to see that water — arguably our most valuable commodity — is an important topic for every single country in the world.

Believe it or not, more than one billion people each day don’t get enough water to drink, bathe, or wash clothes.

Water is a critical resource that will see billions of dollars getting poured into it, and companies that serve this industry will be in high demand for years to come.

No matter how you look at it, the water shortage is going to get worse before it gets better. Especially when you consider the Southwest —millions of people are pouring into this region. Whether they’re coming for warmer climates, high-paying jobs, or lower taxes, they’re coming. And right now, there just isn’t enough fresh water to support all of that growth.

That’s why we think “blue gold” will be one of the best investments of the coming decade.

Think about Maslow’s Hierarchy of Needs… (I included a handy little graphic in case you don’t remember this from high school.)

Physiological needs (and water is certainly one of them) sits right at the bottom of the pyramid. It’s the foundation. You can’t have human growth and flourishing or prosperity without it.

That means we’re going to need to get more creative and industrious about how we get water, conserve it, and get it to people who need it.

For that reason, we think rising water prices will make fortunes for investors who position themselves accordingly.

Nathan gave readers a few ideas to profit in his article. Water utilities are another option. But these utilities are highly-regulated, and will likely only offer utility-like returns to investors.

That’s not what we’re shooting for with our investment predictions report. Instead, we like a little-known company that started buying up water rights years ago in Nevada and Arizona.

It sits right at the heart of the region most affected by this problem. And by holding substantial water rights, we’re banking that early investors will be set up for years of profits.

You can go here to learn more about our investment predictions for 2022 right now.