AFP/File / Johannes EISELE
Warren Buffett, CEO of Berkshire Hathaway, arrives at the May 2019 shareholder meeting in Omaha, Nebraska
Billionaire investor Warren Buffet said Saturday he's
confident the US economy will bounce back from its pummeling by the
coronavirus pandemic because "American magic has always prevailed."
The
89-year-old made the sanguine prediction about the world's largest
economy as his holding company Berkshire Hathaway reported first-quarter
net losses of nearly $50 billion.
Buffett also announced Saturday that his company had sold
all its stakes in four major US airlines last month, as the pandemic
clobbered the travel industry.
"It turns out I was wrong," he said
of his acquisitions of 10 percent stakes in American Airlines, Delta
Air Lines, Southwest Airlines and United Airlines.
Berkshire Hathaway had paid $7 billion to $8 billion, and "we did not take out anything like that," he said.
Between
the purchases that took place over months, and the sale, "the airlines
business I think changed in a very major way" and could no longer meet
Berkshire criteria for profitability, he said.
Buffett's
announcement may further hurt airlines already pushed to the brink by
coronavirus lockdown measures, now looking to the US government for $25
billion in relief funds.
- 'American miracles, American magic' -
Berkshire
Hathaway, based in Omaha, Nebraska, called its first-quarter setback
"temporary" but said it could not reliably predict when its many
businesses would return to normal or when consumers would resume their
former buying habits.
"We've faced great problems in the past,
haven't faced this exact problem -- in fact we haven't really faced
anything that quite resembles this problem," Buffett said in a lengthy
speech on the country's economic history.
"But we faced tougher problems, and the American miracles, American magic has always prevailed and it will do so again."
"We
are now a better country, as well as an incredibly more wealthy
country, than we were in 1789... We got a long ways to go but we moved
in the right direction," he said, referencing the abolition of slavery
and women's suffrage.
"Never bet against America."
Buffett
is considered one of the savviest investors anywhere. His fortune of $72
billion is the fourth-largest in the world, according to Forbes, and in
normal years, the company's annual gathering in Omaha is a high-point
of the calendar for investors, a "Woodstock for capitalists."
But
the devastating economic impact of the pandemic has hit hard at
Berkshire Hathaway's wide range of investments, and the need for social
distancing forced it to hold the annual meeting online.
Buffett
addressed his shareholders in a livestream flanked only by Gregory Abel,
who is in charge of Berkshire's non-insurance operations.
His business partner for six decades, 96-year-old Charlie Munger, did not appear.
- Growth by one measure -
Buffett,
in a statement, played down his company's bleak-looking net figure. He
said a better measure of the company's performance was its operating
earnings, which exclude investments and are less subject to sharp
fluctuations.
By that measure, Berkshire Hathaway saw growth to $5.9 billion from $5.55 billion a year earlier.
The
brutal drop in the net -- to a loss of $49.75 billion from a profit
last year of $21.7 billion -- resulted primarily from the virus-related
decline in value of its broad investment portfolio, which ranges from
energy to transport to insurance and technology.
The annual
meeting often has an almost carnival atmosphere, as thousands of fans
and investors flock to Nebraska to hear from the celebrated "Oracle of
Omaha." Buffett, famous for his relatively modest lifestyle, turns 90 on
August 30.
In documents filed Saturday, Berkshire noted that
until mid-March many of its companies were posting "comparative revenue
and earnings increases" over the same 2019 period.
Many of its
companies -- including in rail transport, energy production and some
manufacturing and service businesses -- are deemed essential and are
able to continue working amid the far-reaching confinement orders.
But their turnover slowed considerably in April, the company statement said.
Moves
taken by those companies such as employee furloughs, salary cuts and
reductions, and capital spending reductions are "necessary actions" and
"temporary," it said.
Comments
Post a Comment