Wednesday, July 8, 2020

Warren Buffett sold all of his shares in American airlines

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Berkshire Hathaway, Warren Buffett’s holding company, recorded a net loss of almost $ 50 billion in the first quarter, the value of its investment portfolio plummeting in concert with the stock market crash caused by the pandemic of the new coronavirus.

Fourth world fortune with 72 billion dollars, according to the Forbes barometer, the famous American businessman prefers for his part to measure the performance of his protean holding – besides stocks, it also has activities “realIn insurance, transport and energy, for example – operating profit, less subject to fluctuation. The latter stood at 5.9 billion dollars against 5.55 billion a year earlier.

The substantial loss in net income, which stood at $ 49.75 billion compared to a profit of $ 21.7 billion in the first quarter of 2019, is mainly due to a drop in the value of the investment portfolio that Berkshire Hathaway owns. An accounting rule of 2018 forces the holding company to evaluate it in its quarterly accounts. A year earlier, this line of accounts still posted a positive balance of $ 15.5 billion.

Uncertainties around the future of air transport

Warren Buffett was speaking on Saturday at the famous Berkshire Hathaway general meeting. But like all other public gatherings, it is virtual this year and the billionaire addresses his shareholders during a live broadcast on the internet flanked only by Gregory Abel, in charge of non-insurance operations.

The one we call “Oracle of OmahaRevealed that its holding company Berkshire Hathaway had sold in April its entire stake in the four main American airlines, believing that the pandemic had changed the situation and that the investment was “a mistake” “It turns out that I was wrong“Recognized the businessman, commenting on this acquisition of ten percent in American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.

Berkshire Hathaway had paid $ 7 billion to $ 8 billion, and “we sold for much less than thatSaid the fourth richest man in the world and considered an outstanding investor. Between the time the holding company bought its stakes over many months and the resale, “the airline industry has changed dramaticallyAnd therefore could no longer meet the profitability criteria set by the company.

Warren Buffett stressed that the companies were well managed but that the uncertainty about the future of air transport was too great for Berkshire to remain invested.

Never bet against the United States

In a long monologue on the economic history of the United States, Warren Buffett said he was convinced that the American economic miracle “will prevail againAfter the world’s first economy was brought to its knees by the pandemic. “We have faced serious problems in the past, although we have never faced exactly that problem. But we had to face more serious problems and the American miracle, American magic will prevail once againSaid the 89-year-old billionaire.

Today we are a better country, as well as an incredibly richer country than we were in 1789 (…) We still have a long way to go but we are going in the right direction“, He said, referring to the abolition of slavery and the vote of women, before launching his famous”never bet against the United States

.

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