Warren Buffett is one fourth-richest person in the world, and this fact shows that Buffett knows how to cope with various challenges. The aviation industry is not an exception. Moreover, Berkshire Hathaway owns significant minority holdings in the U.S. public companies such as American Express, Apple, Bank of America, The Coca Cola Company, etc. However, he sold his stake in airlines.
Warren Buffett changed his mind regarding aviation stocks, as he is no longer investing in aviation stocks.
Last weekend’s Berkshire Hathaway’s annual meeting was full of interesting details. It will take a lot of time to discuss all of them, so let’s focus on aviation stocks. Moreover, thanks to the annual meeting investors have a better idea of how Buffett is investing during the pandemic.
As stated above, one of the most important decisions relates to the aviation industry. Interestingly, the world’s fourth-richest person got rid of the stocks in these major U.S. airlines. As a result, sold his stake of more than 10% in both Delta Air Lines and Southwest Airlines. Moreover, he also sold his stake in American Airlines.
His decisions and opinions influence many investment strategies, so it is important to know why he decided to sell aviation stocks.
Buffett, stocks and major airlines
People should not forget that the aviation industry is cash-intensive and has a narrow economic moat. The coronavirus pandemic had a tremendous impact on the industry as most of the airports are almost empty.
According to Buffett airlines were well-managed before the pandemic. However, at the moment airlines are not able to dictate their rules as the governments introduced measures to curb traveling. As a result, airlines had no other option rather than to reduce the number of employees to reduce costs.
Moreover, this uncertainty makes airlines stocks a volatile investment until the industry will get back on track. Consequently, it made sense to sell airline stocks.