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May 6, 2020

Why The Oracle of Omaha Isn’t Buying It

By Team Stash

Warren Buffett talks airline stocks during Berkshire Hathaway’s first-ever virtual annual meeting.

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Like the many festivals and concerts that have been canceled or forced online this year, “Woodstock for Capitalists”—the nickname for Berkshire Hathaway’s annual meeting—also went virtual last week.

Multibillionaire investor Warren Buffett hosted Berkshire’s highly-anticipated annual shareholder meeting on May 2, 2020. And it was conducted exclusively online for the first time in the company’s history, due to stay-at-home orders related to the spread of Covid-19. Among the top takeaways: Buffett, who is Berkshire’s chairman and chief executive, expressed faith in the U.S. economy in the face of the virus, but nevertheless announced Berkshire had sold off its entire portfolio of airline stocks, worth billions of dollars. 

Here are the biggest takeaways from the meeting: 

  • Berkshire Hathaway sold its entire holdings in airline stocks. The company reportedly owned 10% of Southwest, Delta, American, and United Airlines, jointly worth about $6 billion. Buffett said that it would likely take years for the airline industry to recover from the steep decline in air travel, down about 95% for the year. 
  • The sale added to Berkshire’s liquidity. The company holds $137.3 billion in cash.
  • Despite the company’s growing cash pile, Berkshire Hathaway hasn’t made any big acquisitions recently. While Buffett didn’t rule out making any big deals in the future, he said that the company hasn’t encountered any deals it wants to pursue..  
  • Berkshire Hathaway reported a record net loss of nearly $50 billion for the first quarter of 2020, compared to the $21.7 billion of profit in the first quarter of 2019. In light of the health and financial impacts of the coronavirus, Buffett appeared to demonstrate optimism. Buffett compared the pandemic to past problems such as 9/11, World War II, and the 2008 recession that the U.S. has encountered and overcome, and he said he put his faith behind the “American miracle” to recover from the effects of the virus.
  • Buffett also discussed the insurance industry, where Berkshire has a large presence. He said he expects insurance companies to face lawsuits from customers over losses caused by the pandemic. Berkshire Hathaway owns the home and car insurance company Geico, as well various underwriting and indemnity companies. 
  • Buffett said once again, as he did in his February, 2020 letter, that he and Berkshire Vice Chairman Charlie Munger are both in good health. Munger is 96 years old and Buffet is 89 years old.

More on Warren Buffett and Berkshire Hathaway

Buffett started out small, working a paper route as a boy in Nebraska, and holding various odd jobs, until he eventually bought a struggling Massachusetts cloth mill called Berkshire Hathaway in 1962.

Much of Berkshire Hathaway’s success has been based on Buffett himself, who built the company from a struggling cloth spinning company, to its current gargantuan size. Buffett is currently worth $87.5 billion.

Berkshire Hathaway owns many well-known companies including: 

Companies Owned by Berkshire Hathaway
Kraft Heiz
GEICO Insurance
See's Candies
Dairy Queen
Fruit of the Loom
Oriental Trading
Benjamin Moore

*Source: Berkshire Hathaway

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Team Stash


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