Warren Buffett waited years to make stocks look more appealing. He obviously did not think the first quarter collapse was that kind of opportunity.
As the pandemic-triggered market crash began to hit the U.S., by the end of March Berkshire Hathaway Inc., the famous investor, was building its huge cash pile to a record $137 billion. The firm said the number soared even higher when it unloaded over $6 billion in stocks last month, making Buffett so far this year a net seller of equities.
Berkshire Hathaway Inc. sold all its shares in April on the four biggest U.S. airline companies, Chairman Warren Buffett disclosed at the company's annual meeting on Saturday, adding "the landscape has changed" for the airline market.
According to its corporate filings, the group holds major positions in the airlines, including an 11 percent interest in Delta Air Lines, 10 percent of American Airlines Co, 10 percent of Southwest Airlines Co and 9 percent of United Airlines at the end of last year.
The group was one of the biggest individual investors, and announced in 2016 that it had started investing in the four airlines, after years of steering clear off the business.
Corporate profits, even before the pandemic, have been in decline since last year. Yet in Buffet's scorching letter to Berkshire Hathaway shareholders in 2019, he said even the profits corporate America is posting are outrageous figures.
Following the market collapse, Buffet turned around and dumped $30 million in Bank of New York stocks. He also sold a whopping $314 million in Delta Airlines shares and $74 million in Southwest Airlines, as he moved to scale back his stakes of the airlines sector which has been battered by stay-at-home orders that have been imposed since the health crisis crippled much of the globe in the past three months.
As attempts to control the spread of the pandemic intensified in the second half of March and persisted through April, most of Buffet's companies were affected adversely, with the consequences varying from relatively mild to extreme to date, the company announced in a regulatory filing Saturday.
U.S. airlines are slashing hundreds of thousands of flights, parking thousands of commercial aircraft as travel demand plunged by around 95 percent and there's no clear timeframe for customers to return flying at pre-pandemic levels. The airline industry's forecast has rapidly reversed, Buffet said.
Delta's share, the largest airline by market capitalization, has fallen by 59 percent in the year to date, United Airlines has dropped by almost 70 percent so far this year, Southwest has sunk by about 46 percent so far in 2020, and American Airlines has declined by 63 percent in the same period as the closing of Friday.
