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Why is Warren Buffett on a Billion Dollar Stock Buying Spree?

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"He sees something, and it's big."

Despite the fact that this has been one of the worst quarters for U.S. stocks since the financial crisis began, billionaire Warren Buffet has been buying up stocks at a breakneck pace.

A filing late Friday from Buffett's Berkshire Hathaway shows it recently bought $20 billion in stocks in Q3--including $6.9 billion worth of dabbling in U.S. stocks, report CNN Money.

$8.7 billion was also put towards purchasing stocks for a chemical company called Lubrizol Corp. and $5 billion was invested in "preferred shares and warrants" of Bank of America.

"He sees something, and it's big," said Thomas Russo, a partner at Gardner Russo & Gardner, in a recent Bloomberg report.

The aforementioned $6.9 billion in common stock purchases represented a "fairly aggressive" market position for the third quarter, said Greggory Warren, the analyst who follows Berkshire for Morningstar, to CNN.

But that shouldn't be a surprise. CNN reports:

The blue chip Standard & Poor's 500 fell 14% in the third quarter, the biggest drop since the fiscal crisis hit markets in the final three months of 2008. Other major indexes also tumbled . . .

[However] Buffett continued to be bullish on stocks in comments during the period. On Aug. 15, he told PBS interviewer Charlie Rose that on the first day of trading after the U.S. credit downgrade -- as the S&P 500 plunged nearly 7% -- Berkshire made its largest single-day stock purchases of the year to date. And he said the $7 billion Berkshire had invested to that point of the year was at least $1 billion more than it had ever purchased in a year.

"It's like buying on sale," he said in that interview.

In regards to the recent stock purchases, analyst Warren said, "That's a better jump than we've seen from [Berkshire] in a while."

The recent stock purchases might indicate that Buffett sees something that others are missing in the market. His Q3 investment is much larger than the $3.6 billion in stocks he purchased in in Q2 and and the $1 billion he purchased in in Q1.

"We saw a fairly significant decline in the [third] quarter," said Greggory Warren. "The question is where [Buffett] put the money to work. We'll have to wait to find that out."

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