Berkshire Hathaway, Warren Buffett's holdings company, is significantly reducing its stake in US investment bank Goldman Sachs. According to its regulatory filing, Berkshire Hathaway had sold off around 84 percent of its existing stake in the bank during its first quarter.
The company's filing with the Securities and Exchanges Commission (SEC), which was released on Friday last week, revealed that Berkshire Hathaway had sold around 10.1 million Goldman Sachs shares during the first quarter when the bank's stock had lost almost a third of its value following the spread of the coronavirus pandemic.
Prior to the sale, Buffett's company had owned about 12 million shares, which means that Berkshire Hathaway now only owns about 1.9 million shares. Berkshire Hathaway has been a major backer of the Wall Street bank, famously injecting more than $5 billion at the height of the global financial crisis in 2008. Berkshire later cashed out on its investment in 2011, making a profit of more than $3.7 billion.
The company currently owns majority stakes in other major financial firms, including major stakes in Bank of America, Wells Fargo, PNC Financial, and American Express. Apart from trimming its stake in Goldman Sachs, Berkshire had also cut its shareholdings in JP Morgan Chase. Earlier this month at Berkshire's annual meeting, Buffett had stated that the overall banking system should be able to survive the economic backlash of the pandemic. However, he cautioned that added economic difficulties could put a lot of stress on some banks.
Apart from unloading its shares in Goldman Sachs, Berkshire has made some major changes to its portfolio following the spread of the pandemic. During its annual meeting, the company disclosed to the public that it had sold off its entire stake in major US carriers, particularly its stake in American, United, Southwest, and Delta. Prior to the sale, Berkshire was one of the largest stakeholders in the four carriers, which control more than 80 percent of the country's air travel market.
Regarding the major airline stake sales, Buffet admitted that he was wrong about investing in the travel businesses. He clarified that the failure of the businesses was of course in no way the fault of the companies' respective management teams.
In its SEC filing, Berkshire disclosed that it had also sold shareholdings in companies such as energy firm Phillips 66, financial services firm Travelers Companies Inc, credit card issuer Synchrony Financial Corp, and satellite radio service provider Sirius XM Holdings. In its first-quarter earnings results, the company stated that it had about $137.3 billion in liquidity.