Warren Buffett Dumps U.S. Bank – Airline Stocks And Buys Gold Mining Stock; 13F Filing Shows Tech Exodus Among Hedge Funds
On a recent 13F filing update in the U.S., which gives more insight about the smart money and how it is deploying its capital. Investors are always keen to know and relate this information to their trading strategy. For retail traders, this information can be seen as confirmation of whether their investment strategy is correct and how they can fine-tune it.
Buffett Buys Barrick Gold
The most significant headline of the 13F filing was about Berkshire Hathaway’s BRK.B +0.5% activity. It has purchased stock in Barrick Gold, a Canada-based mining company. Its position in Barrick Gold is worth nearly $565 million.
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The Oracle of Omaha, Warren Buffett, reduced Berkshire Hathaway’s positions in U.S. banks: JPMorgan JPM +3.7%, Wells Fargo WFC +2.5% and PNC. It is critical to mention that Buffett still holds some U.S. banks, and Bank of America BAC +3.2% is one of them.
Overall, it may not be a stretch statement to say Warren Buffett’s fund was more busy selling its positions— the fund sold its airline stocks—than buying stocks during the coronavirus pandemic..
Billionaire investor Warren Buffett, chairman of Berkshire Hathaway, told shareholders on Saturday that he had sold all of the company’s airline stocks, admitting that he had made a mistake and that coronavirus had changed the business in a “very major way.”
Buffett confirmed that he had sold all of his stakes in the four largest U.S. airlines: His positions in United, American, Southwest and Delta Airlines were cumulatively worth north of $4 billion.
“The world has changed for airlines,” Buffett said, noting that the industry has been “really hurt by a forced shutdown” due to the coronavirus.
With the pandemic effectively halting global air travel, U.S. airlines are now receiving portions of $25 billion in federal grants and loans.
Buffett said Berkshire originally invested between $7 billion and $8 billion for large stakes in the major airlines, but the company didn’t get anywhere near that in return for its investment.
“It turned out I was wrong,” the Oracle of Omaha said, adding that he’d made an “understandable mistake” given the unforeseen downturn in the industry.
“I don’t know that three, four years from now people will fly as many passenger miles as they did last year,” Buffett warned. “You’ve got too many planes.”
“When we bought [airlines], we were getting an attractive amount for our money,” Buffett said. “It turned out I was wrong about that business because of something that was not in any way the fault of four excellent CEOs. Believe me. No joy of being a CEO of an airline.”
BIG NUMBER: $6.5 BILLION
That’s the value of stocks sold by Berkshire in the month of April. Buffett’s conglomerate only bought $426 million worth of equities during that period. “We did very little in the first quarter,” he admitted. “That isn’t because we thought the stock market was going to go down,” he explained. “I just decided that I’d made a mistake [with airlines].”
Berkshire Hathaway reported a massive net loss of nearly $50 billion in the first quarter. The coronavirus market selloff that occurred in late February and through most of March took a significant toll on the company’s businesses. Berkshire’s cash pile rose from $125 billion to $137.3 billion, as the Oracle of Omaha continues to look for an elephant-size acquisition.
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