Berkshire Hathaway is a multi-billion dollar conglomerate headed by its Chairman, and CEO Warren Buffett. The company was originally a textile manufacturer, but now owns or holds controlling interests in dozens of big companies. Investors from around the world have eagerly awaited advice from the “Oracle of Omaha” on how to navigate the highly uncertain environment during one of the worst public health and economic crises in history.
Berkshire Hathaway reported first-quarter financial results. It recognized net losses of nearly $50 billion, including an unrealized loss of $55 billion in investments. The company has itself made 31 mentions of the term “COVID-19” in its report. Because Berkshire has investments in a broad range of different industries, its businesses also faced massive roadblocks on account of the global pandemic.
Here are the Key Takeaways from the Meeting:
- Warren Buffett kicked off the 2020 annual meeting by addressing the different circumstances of the event due to COVID-19. “It doesn’t look like an annual meeting and it doesn’t feel exactly like an annual meeting. It particularly doesn’t feel like an annual meeting because Charlie Munger, my partner of 60 years, is not sitting up here,” Buffett said in his opening remarks.
- Small businesses in America have been feeling the wrath of COVID-19. Countless restaurants, bars, and other “non-essential businesses” have been forced to shut down to combat the spread of the coronavirus.
- When asked about share repurchasing programs, Buffett replied, “That’s very politically correct to be against buybacks now. Buybacks are so simple, it’s a way of distributing cash to shareholders.”
- “If you’re an Occidental shareholder or any shareholder in any oil-producing company, you join me in having made a mistake in where oil prices went,” Buffett said to the investor who raised a question about his Occidental Petroleum Investment. The oil production is going to go down in the next few years because it does not pay to drill. This situation is like you don’t know where you’re going to store the incremental barrel of oil, oil demand is down dramatically.
- Talking about the Covid-19 Pandemic, Mr. Buffet states as follows: “The virus is going to determine our behavior. We’re doing a lot of smart things, and we’ve got a lot of very smart people, but there are unknowns. And the unknowns that apply in the health aspect create unknowns in the economy. We will have to keep evaluating things as we go along. I hope that once suppressed that it doesn’t come back and that we readjust.”
- See’s Candies is one of Buffet's favorite investment, which he bought in 1972, has faced immense challenges due to COVID-19, but he still loves his investment. “Easter is a big sales period for See’s. Essentially it was shut down. It’s a very seasonal business to start with. But we have a lot of Easter candy. We won’t sell it”, Buffet ensured.
- “When you think about Boeing. You know, it is one hell of a company and it's important. It's a huge exporter, and it affects a lot of jobs,” according to Buffett. Boeing raised $25 billion in a bond offering, and thus, said it would not seek federal aid.
- Talking about the airlines, Mr. Buffet states:
“The airlines have been disproportionately suffering through the crisis, and this industry has been changed in a very major way.” The future is much less clear to him about how the business will turn out. The world changed for airlines, and he wishes the industry well. He also clarified that he exited all of his investments in the four largest U.S. airlines — American Airlines (AAL), Delta Air Lines (DAL), Southwest Airlines (LUV) and United Airlines (UAL).
- Investing amid the heightened uncertainty can be difficult, but Buffett explained that in the long run, equities will still be a better investment than Treasuries. He guided the investors that equities are going to outperform and that they're going to outperform treasury bills.
- On COVID-19 and its impact on America, Buffett reminded the public that “nothing basically can stop America.”