During this ongoing Global pandemic, even the best of investors have felt the heat from the coronavirus bear market, and amidst this dark hour for the stock market, legendary investor Warren Buffett’s quarterly speech comes as a beacon of hope.
Like all his previous 3 month speeches, even this time the CEO of Berkshire showed what the insurance giant has done with its own portfolio and had plenty to say regarding the investing climate
On May 15th, in a filing with the Securities and Exchange Commission, Berkshire revealed details from its recent portfolio.
Most of the information in the filing is not up to date because it is just a snapshot of Berkshire’s holdings as on March 31st, 2020, however, there were three important aspects from Buffets latest move which every stock market investor needs to know
1. Berkshire had actually added to some of its airline positions — right before he sold out
Earlier in the year, at the annual shareholder meeting, Buffett already revealed that Berkshire had sold off its entire position in the four major U.S. airlines. As per the early April filings, Berkshire had sold positions in Southwest Airlines and Delta Air Lines, and as a result, both companies came below the 10% mark at which more immediate disclosure is required.
When asked about the move, Buffett stated that the common thread of keeping positions below 10% was not the only motivation of the sales, rather it was a move that denotes a major change of perception, however, later the Berkshire CEO said, “It turned out I was wrong about the business.”
But in a later filing, it was then revealed that Berkshire sold off its stakes in American Airlines Group and United Airlines Holdings as well.
Although, interestingly as of March 31, Buffett’s holdings of Delta increased in comparison to that at the end of 2019. Even United noticed a slight increase, but American and Southwest faced small declines.
2. Buffett dropped the ax on these two companies, but there was a completely unexpected surprise
During the first quarter, two major positions were completely sold off by Buffett. Energy company Phillips 66 and Insurance giant Travelers have been removed from Berkshire’s holdings in the first quarter.
However, it is fair to say that every investor saw this coming, as back in the fourth quarter of 2019, Berkshire reduced its position in Travelers by nearly 95%. While an even larger percentage of reduction was seen in Phillips 66 as of Dec. 31, 2019. It was about time that these transactions completely be overwritten from the books.
Although a big surprise which was rather unexpected was Berkshire’s reduction in position in Goldman Sachs.
Back in September 2019, Berkshire owned 18.4 million shares in Goldman Sachs, however, as of March 31st, Berkshire reported owning only 1.9 million Goldman shares. It can be termed as a decent payday considering Buffett’s opportunistic purchase made during the financial crisis, but we could not help but notice the timing of the big sale as it comes while even out-of-favor rival Wells Fargo escaped with no reductions amongst Berkshire’s holdings.
3. No significant buys
During this current coronavirus bear market, many expert investors had predicted that Buffett would make big investments, however, according to the March 31 report, Berkshire has opted for a rather conservative position.
The filing also revealed that Berkshire did not go through any major changes in the latest quarter, however, there was one noticeable exception as an added position in PNC Financial Services Group (NYSE:PNC), showed that the investment giant grew its holdings by over 500,000 shares to nearly 9.2 million.
What’s next for Berkshire?
It is no secret that we get just a glimpse at Warren Buffett and his investment decisions in each quarter, and like always his most recent filing has left us questioning our investment strategies more rather than getting some stable answer, but that is the beauty of the stock market.
The two main topics of focus currently for the Berkshire CEO during this global pandemic situation is that he has bullish sentiments in long-term prospects for the stock market, and the second area of focus is to endure that the insurance mogul is equipped with a surplus capital flow to tackle any outcome that comes from this ongoing coronavirus crisis.