Before it exited its surprise airline investments in April with multi-million dollar losses, Warren Buffett’s Berkshire Hathaway was cleaning up of its huge investment portfolio, according to the quarterly 14-F filing with the US Securities and Exchange Commission.
In the fund managers filing Berkshire revealed that it had sold much of its stake in Goldman Sachs despite the billionaire’s assurance at the Berkshire AGM earlier this month that the banking sector was not a “primary worry” for him during the coronavirus pandemic.
Berkshire also sold sales in a major insurer, an energy company but lifted its stake in a major regional bank, PNC.
Berkshire ended March with a record $US137.3 billion of cash, disappointing investors unhappy with the low yields it generates for the company.
The cash stake rose in April as Berkshire sold its entire stakes in the four largest US airlines: American, Delta, Southwest and United.
At their peak, in February those holdings were worth close to $US8 billion but had shrunk dramatically in value thanks to the COVID-19 pandemic and lockdowns which halted airline travel everywhere.
The investment looks like it cost Berkshire around half the value at the peak – the value of the sales was estimated at around a combined $US4 billion.
Before the sales – which started in early April, Berkshire owned an 11% stake in Delta Air Lines, 10% of American Airlines, 10% of Southwest Airlines, and 9% of United Airlines.
Including the airlines, Berkshire sold $US6.5 billion worth of shares in the month of April but only bought $US426 million worth of equities. The deals will appear in the June quarter 14-F filing around August 15.
Buffett admitted the purchases which started in 2016 were a “mistake” and told the online meeting that the world had changed for airline noting that the industry has been “really hurt by a forced shutdown” due to the coronavirus. It was the second lot of losses Buffett and Berkshire have experienced in the airline business.
In Friday’s filing detailing its U.S.-listed investments as of March 31, Berkshire said its Goldman stake fell 84% to 1.9 million shares, from 12 million at the end of 2019, with the stake’s market value dropping to $US297 million from $US2.76 billion.
Goldman’s stock price fell about 33% during the quarter, and some of Berkshire’s selling appears to have occurred after the slide began.
Berkshire sold its remaining small stakes in the insurer Travelers Cos and oil refiner Phillips 66, and tweaked several holdings. Its stake in Wells Fargo was unchanged, though the stock’s price fell 47%.
Berkshire remains a major shareholder in American Express, Bank of America, Bank of New York Mellon, JPMorgan Chase, PNC Financial, US Bancorp, and Wells Fargo.
Berkshire also trimmed its holding in JPMorgan Chase from 1.94% to 1.88% – selling 1.7 million shares to hold 57 million. It also bought 526,930 PNC shares to last hold 9.19 million shares in the regional bank.
Berkshire shares are still underperforming the market – the shares are down 25% against an 11% slide for the S&P 500.
That’s because stupid analysts and some investors without memories say Buffett has too much cash – $US137 billion at the end of March, up from just over $US127 billion at the end of December 2019.
At the moment, cash is king, but the deals lean.
