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?“
