Buffett sees first-quarter net losses of $50 bill. amid COVID-19 crisis

Known as “the Oracle of Omaha,” Berkshire Hathaway’s Chairman CEO Warren Buffett saw first-quarter net losses of nearly 50 billion U.S. dollars amid the COVID-19 pandemic. He has so far been famous for making a profit by holding promising but undervalued stocks over the long term. Amid the prolonged pandemic, however, Buffett saw a significant loss in his investments in U.S. aviation stocks that he had started buying in from February since the early days of the COVID-19 outbreak.

Berkshire Hathaway revealed on Saturday (local time) that the net loss reached 49.7 billion U.S. dollars in the first quarter of the year, according to CNBC. In stark contrast to the conglomerate’s earnings of 21.66 billion dollars in the first quarter of last year, it is the largest loss ever since the company was founded back in 1839.

The large-scale quarterly loss resulted mainly from an investment loss of 54.52 billion dollars. Berkshire Hathaway started buying 976,000 shares of Delta Air Lines on Feb. 27, then continuing to make an aggressive purchase of shares of major U.S. airliners. Berkshire Hathaway made a preemptive investment assuming that the pandemic would end in the not-too-distant future. However, it ended up seeing a snowballing loss with the global aviation industry getting almost paralyzed by the sustained pandemic.

With aviation stock prices taking a nosedive, the billionaire investor began selling the shares early in April. Buffett said on Saturday at Berkshire Hathaway’s 2020 Annual Shareholder Meeting that he made a bad investment. He sold all the stakes that he had held of Delta Air Lines, American Airlines, Southwest Airlines, and United Airlines, which are estimated at around 6 billion dollars. He added that he has not found any alternative investment destination yet while sharing an optimistic view of the U.S. economy. “Nothing can stop America when you come down to it, even with the scariest of scenarios. It may have been tested during the Great Depression, and it may be tested now to some degree. In the end the answer is never bet against America,” Warren Buffett said. “That in my view is true today as it was in 1789 and even was true during the Civil War and depths of the depression.”


Ji-Sun Choi aurinko@donga.com