Berkshire Hathaway 2020 (Virtual) Annual Meeting

[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway (“Berkshire”), or any other entity referenced. Edina Realty is a subsidiary of Berkshire.]

Perhaps the biggest news from Berkshire Hathaway’s (online) annual meeting yesterday was Warren Buffett’s bearish call on airlines: Berkshire liquidated 100% of its holdings in Delta, American, United, and Southwest Airlines.

Much less remarked: an implicit plug for companies that offer alternatives to commercial airlines.

Reading Between the Lines

That’s based on this comment:

“Mr. Buffett said he was personally looking forward to flying again, though he “may not fly commercial.”

–“Warren Buffett Says “American Magic’ to Overcome Coronavirus Uncertainty”; The WSJ (5/2/2020).

So, which companies offer alternatives to commercial airlines?

No Pure Play

Certainly one would be NetJets, which sells fractional ownership shares in private jets.

The only catch for would-be investors is that it’s not a publicly-traded, standalone company, but rather a relatively small subsidiary of a certain Omaha-based, globe-spanning conglomerate.

Need another clue?

Its Chairman’s name rhymes with “Schmuffett.” 🙂

Once the economy — and corporate spending — rebounds, another likely beneficiary of non-commercial air travel would seem to be small jet makers like Cessna, Gulfstream, and Duluth-based Cirrus Aircraft.

Unfortunately for investors again, those companies are all either subsidiaries of much larger companies or privately-held.

$137 Billion (and Growing) War Chest

Buffett also addressed ongoing speculation regarding Berkshire’s humongous and still growing cash pile: over $137 billion.

Market watchers hoping for a vote of confidence were disappointed: for now at least, Berkshire is sitting tight.

According to Buffett, that stance is due to: 1) swift action taken by The Federal Reserve, relieving — at least for now — many companies’ financial distress (and their eagerness to turn to white knights like Berkshire); and 2) the inherent uncertainty of navigating a once-in-a-century event like a pandemic.

See also, “Warren Buffett: How Marriages, Corporate Acquisitions Are Alike“; “2016 Berkshire Hathaway Annual Meeting to (Also) Be Online For 1st Time“; and “How Warren Buffett Would Buy a Home.

Plus: “Warren Buffett Negotiating Secret #37“; “Warren Buffett, Arborist (Figuratively Speaking)“; and “What Motivates Senior Managers at Berkshire Hathaway?

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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