What is Warren Buffett’s Next Move After Losing Billion Amidst Coronavirus Panic?

Warren Buffett is among the most admired and trusted investors in the world. Thus, it’s not surprising that many are watching out for his next moves as he navigates the recession the coronavirus pandemic helped usher in. After news of his holdings company’s top stocks losing billions in value, it looks like the billionaire is wasting no time to deal with the damage.

Reduced Stakes

Conde Nast Traveler | Southwest Airlines is one of the largest airlines in the world

According to sources, Buffett’s Berkshire Hathaway sold a whopping $390 million in their shares in airline investments. The company’s pulling back of stock in Southwest Airlines and Delta Airlines is reportedly a way for it to reduce exposure to a business sector that’s taking huge hits from the economic meltdown in the wake of the coronavirus pandemic.

As the Securities and Exchange Commission (SEC) reported, the conglomerate stake in Delta decreased from 71.9 million to 58.9 million shares, an almost one-fifth reduction. Meanwhile, the same agency revealed that Berkshire Hathaway did away with 2.3 million shares in Southwest.

The decision certainly caused a ripple effect as Southwest’s and Delta’s stock went down by 9% and 11% as news of it spread. Berkshire Hathaway took a $5 billion hit on its stakes in the United States four major airlines during the last quarter.

Taking Hits

Unsplash | A lot of flights are reportedly taking off empty or with only a few passengers

The airline industry is one of the most impacted by the coronavirus pandemic as the world is put in a standstill in attempts to curb the spread of the contagious virus. Companies like American Airlines and JetBlue have also recorded falls of 12% and 9%, respectively. Unfortunately, the near future doesn’t seem to be better for the travel industry as experts expect the pausing of flights to continue on until the upcoming summer travel season.

Industry leaders are currently looking at solutions to cut on losses. According to financial expert Mark Tepper, executives might consolidate flights to particular cities to deal with the problem. He also expressed his belief that airlines like United and Delta are ‘too big to fail’.

Berkshire’s Losses

Bloomberg | Berkshire Hathaway saw a share-price decline of 43% on its top stocks from late February to March

Berkshire Hathaway’s losses have been estimated to have clocked in at over $80 billion. This massive number is spread out through 10 of the holding company’s largest equity investments like Coca-Cola and Apple, whose values were eviscerated by the coronavirus panic. On the flipside, Buffett had the foresight to keep a cash reserve of a whopping $128 billion ready to use for when the investor comes across a good deal despite the times.