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— surprising change of course
Warren Buffett sells part of his airline investments
Bitcoin fans speculate: does Buffett give Bitcoin a chance?
Warren Buffett is a long-term investor and known for his patience. However, the star investor has now surprisingly pulled the rope for airlines that are among the sectors most affected by the corona pandemic and some of which are in the portfolio of Buffett’s investment company Berkshire Hathaway. Previously, with slumps in demand, canceled flights, travel restrictions and calls for government aid programs, the negative headlines in the industry had been increasing.
Airlines holdings reduced
As MarketsInsider reported, citing SEC filing, Berkshire Hathaway has recently divested Delta Air Lines and Southwest Airlines shares for a total of $ 389 million.
Specifically, the number of Delta shares was reduced from 71.9 to only 58.9 million, which reduced the stake held from 11 to 9 percent. The nearly 13 million shares sold spilled approximately $ 314 million into Berkshire Hathaway’s box office. The stake in Southwest was also reduced. Around 2.3 million shares were sold for around $ 74 million.
surprising decision
This move surprised the markets. In March Buffett finally told “Yahoo Finance” that he wanted to hold on to his airlines’ holdings. In addition, he had only bought Delta shares at the end of February – at a price that was almost twice the price at which he has now sold them again.
According to MarketsInsider, Berkshire Hathaway’s portfolio lost an estimated $ 5 billion in value in the last quarter solely through its holdings in four major US airlines. But Buffett usually has the patience to endure such crises. However, it may have unsettled him that it is impossible to predict how long the crisis will continue and whether the airlines will survive.
Delta CEO Ed Bastian had to admit that the US government aid that had been applied for so far would not be sufficient to ensure the survival of the company. In addition, the future is completely uncertain. Bastian pointed out that one simply did not know “how long it takes for the virus to be contained and customers to be ready to fly again”.
Gigantic cash reserves
For Warren Buffett, the question now is, what do you do with the money raised? The Omaha Oracle, as it is called, previously sat on cash reserves of $ 128 billion (as of the end of December) that are being invested. This enormous amount has accumulated over the years because Buffett rated company valuations as too high for a commitment during the last record-breaking bull market. Now this gigantic cash mountain has grown again.
The star investor had repeatedly said in the past that he would like to carry out one or more large deals with the money he had accumulated. No question about it, after the recent stock market crash, the ratings plummeted to such an extent that Buffett found some favorable options. On the other hand, as already mentioned, it is uncertain how long the current crisis will last. It is questionable whether Buffett is making a big deal in such an uncertain market environment. In any case, no corresponding plans have yet been published.
Buffet before investing in Bitcoin?
In view of this, the crypto community is already debating whether Warren Buffett could possibly make a turnaround with Bitcoin and Co., as he did with the airlines. – Trade Bitcoin with Plus 500 – how it works. 76.4% of retail CFD accounts lose money. – In February, the billionaire reiterated its negative attitude towards the US broadcaster “CNBC”: “Cryptocurrencies are basically of no value and they produce nothing”. But it is also a fact that Buffett changed his opinion on airlines within a month, thereby proving that he is ready to react flexibly to market events.
The cryptocurrency portal “BeInCrypto” also participated in the speculation whether Buffett could now find space for Bitcoin in his portfolio. Bitcoin was also affected by the crash, but it is already on the way to recovery. Furthermore, the upcoming halving typically has a bullish effect on the world’s most popular cryptocurrency, and the second quarter is usually a strong quarter for Bitcoin.
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However, “BeInCrypto” also pointed out that Buffett, at the age of 89, should be fairly firm in his views and therefore could possibly never change his opinion on Bitcoin. However, hope was raised that Greg Abel or Ajit Jain – who are seen as potential successors to Warren Buffett – might take a different stance on cryptocurrencies.
Editorial office finanzen.net
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