Stock exchange legend Warren Buffett has made a surprising change of course. Could that mean he is changing his mind about cryptocurrencies too?
• Surprising change of course
• Warren Buffett sells part of its airline holdings
• 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 ripcord 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, the slump in demand, cut flights, travel restrictions, and calls for government aid programs had increased the negative headlines in the industry.
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Airlines holdings reduced
As MarketsInsider reported, citing SEC filings, 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 flushed around $ 314 million into Berkshire Hathaway’s till. The stake in Southwest was also reduced. Around 2.3 million shares were sold for around $ 74 million.
Surprising decision
This step has surprised the markets. Finally, Buffett had told “Yahoo Finance” in March that he wanted to hold onto his airlines investments. 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 now sold them again.
According to “MarketsInsider”, Berkshire Hathaway’s portfolio lost an estimated $ 5 billion in value in the last quarter solely from its holdings in four major US airlines. But usually Buffett 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 already to admit that the US government aid that had been applied for so far would not be enough to ensure the company’s survival. 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 $ 128 billion in cash reserves as of the end of December, which it plans to invest. 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 stated in the past that he would like to carry out one or even several large deals with the accumulated money. No question about the youngest Stock market crash the ratings have dropped so much that Buffett has some cheap options. On the other hand, as already mentioned, it is uncertain how long the current crisis will last. It is questionable whether Buffett will make a big deal in such an uncertain market environment. At any rate, no plans have yet been published.
Buffet before investing in Bitcoin?
In view of this, the crypto community is already discussing whether Warren Buffett could possibly make a turnaround with Bitcoin and Co. as he did with the airlines. In February the billionaire reiterated his negative attitude towards the US broadcaster “CNBC”: “Basically cryptocurrencies have no value and they produce nothing”. But it is also a fact that Buffett changed his opinion about airlines within a month, proving that he is ready to react flexibly to market events.
The cryptocurrency portal “BeInCrypto” also participated in speculation as to whether Buffett could now find space for Bitcoin in its portfolio. Bitcoin was also affected by the crash, but it is already on the way to recovery. Furthermore, the upcoming halving usually has a bullish effect for the world’s most popular cryptocurrency, and the second quarter is usually a strong quarter for Bitcoin.
However, it was also pointed out at “BeInCrypto” that Buffett, at the age of 89, should be pretty firm in his views and therefore could possibly never change his opinion on Bitcoin. However, hope was also expressed 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.ch
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