Berkshire Hathaway sold all his airline shares, lost $50B in three months
May 05 2020
Warren Buffet's Berkshire Hathaway Inc. has sold its entire holdings in USA airlines in the wake of the coronavirus that has led to a virtual standstill of the industry and revenue losses in the billions.
Buffett's announcement might further hurt airlines pushed to the brink by coronavirus lockdowns and looking to the U.S. government for US$25 billion in relief funds.
However, he also cautioned that there is always an element of uncertainty in the market and while one can bet on the U.S., they must be careful about their bets.
During the financial crisis, Berkshire Hathaway made lifeline investments, especially to the banks, which was viewed by many as a Buffett seal of approval.
The meeting was streamed on Yahoo Finance.
Also on Saturday, Berkshire reported a net loss of almost 50 billion dollars for the first quarter as the COVID-19 outbreak heavily hit its stock investments.
By that measure, Berkshire's operating earnings improved to $5.87 billion, or $3,617.62 per Class A share, from $5.56 billion, or $3,387.56 per Class A share.
US stock index futures retreated on Monday after a fresh spat between Washington and Beijing over the origin of the novel coronavirus, while airlines slumped as Berkshire Hathaway dumped its holdings in the sector.
Mr Buffett said he had been considering investing in additional airlines before the pandemic hit.
Additionally and on a more philosophical level, there are concerns that in a post-coronavirus world, consumer behaviour will be irrevocably changed. "And I don't know how it's changed and I hope it corrects itself in a reasonably prompt way", he said.
In a very remarkable turn of events, Bitcoin which has now amassed over 20% in gains while recouping from its fatal slump in March has continued to outperform rivals like the S&P's 500, gold, and most interestingly the Berkshire stock which was anticipated by Buffett to overtake down markets.
We should mention.under a new accounting rule, Berkshire must report unrealized gains and losses, but because of its massive stock holdings the company says those figures are "usually meaningless". He said he meant to do it, but was not able to find anything attractive. Abel lives closer to Omaha than Munger and Jain.
Speaking at an annual meeting in Omaha, Nebraska, which for the first time was live streamed and held without shareholders, the 89-year-old billionaire tried to reassure them by recalling the hardships of the past that the United States successfully survived through and thrived.
Buffett and Vice Chairman Greg Abel, 57, spent almost 2-1/2 hours answering shareholder questions posed by a reporter. Some businesses cut salaries and furloughed workers, and retailers such as See's sweets and the Nebraska Furniture Mart closed stores. He is considered to be the top candidate who will eventually succeed Buffett as chief executive officer.
Vice Chairman Ajit Jain, 68, who oversees Berkshire's insurance businesses and is also a possible CEO candidate, did not attend either.
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