- Warren Buffett sold all of Berkshire’s airline stocks in April.
- But retail investors on the Robinhood app can’t get enough of them.
- Other popular stocks might offer a clue as to what they’re thinking.
Would you bet against the Oracle of Omaha? Hundreds of thousands of casual investors are. While Warren Buffett sold nearly $6.5 billion worth of airline stocks in April, the industry’s shares are some of the hottest offerings on the Robinhood brokerage app.
When Warren Buffett divested his entire airline holdings in April, it came as quite a shock. Berkshire Hathaway (NYSE:BRK.A) had just been a buyer of Delta Airlines (NYSE:DAL) as recently as February. An SEC filing disclosed the purchase of 976,507 Delta shares on Feb 27 for $45.3 million at $46.40 per share.
Warren Buffett: Airlines Future Uncertain
At the first-ever virtual Berkshire Hathaway annual shareholder meeting, Warren Buffett said buying the airlines was a mistake, and their future is now uncertain:
I don’t know that three, four years from now people will fly as many passenger miles as they did last year.
Berkshire Hathaway was one of the biggest shareholders in several airline companies. Some have speculated that Buffett would eventually own one of the carriers.
The dramatic crash in equities prices this year looked like a good time for that “elephant-sized” acquisition that Buffett’s been hankering for. Some thought t In Feb 2019, he told Berkshire shareholders in his annual letter:
In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will permanently own. The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects.
He said just thinking about it quickened his heart:
Even at our ages of 88 and 95 — I’m the young one — that prospect is what causes my heart and Charlie’s to beat faster. (Just writing about the possibility of a huge purchase has caused my pulse rate to soar.)
But instead, Berkshire sold Delta Airlines stock worth $314 million, and $74 million of Southwest Airlines (NYSE:LUV) on Apr 1 and 2. It was no April Fools prank. By the end of the month, Warren Buffett had rid his company’s books of $6.5 billion in equities. Most of it was Berkshire’s entire airline holdings.