- Warren Buffett has kept a strangely low profile as the coronavirus outbreak continues to shake markets.
- The billionaire boss of Berkshire Hathaway, armed with a $128 billion cash pile, could capitalize on the recent sell-off to bolster his portfolio or throw a lifeline to companies as he did during the financial crisis.
- We asked investing enthusiasts on Reddit to speculate on what Buffett is up to, and their suggestions included biding his time, boosting his Apple and Amazon stakes, investing in Google, and striking bailout deals.
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Warren Buffett has been unusually quiet for weeks as the coronavirus pandemic and oil shocks continue to rattle global markets, leading many to wonder what he’s doing.
The famed investor’s Berkshire Hathaway conglomerate boasted a $128 billion cash pile at the end of December, which Buffett has been itching to deploy for years. The recent market meltdown may have allowed him to bolster his portfolio at bargain prices.
Moreover, companies ranging from airlines and casinos to hotels and cruise lines are suffering from travel restrictions and lockdowns in response to the coronavirus. They could look to Buffett for help, given he bailed out Goldman Sachs, General Electric, and other companies during the 2008 financial crisis.
Buffett and his partner, Charlie Munger, should spill a few of the beans at Berkshire’s annual shareholder meeting on May 2. In the meantime, we asked a bunch of investing enthusiasts on Reddit to speculate on what he’s been up to.
Here’s what eight of them told us, purely based on speculation and their personal views:
“The man’s 89, he has to be acutely aware that Covid-19 could wipe him out in a heartbeat. He doesn’t have time to ride out and profit from another long recession, so he’s probably just getting his ducks in a row.”
“Berkshire has lost almost $100 billion in market capitalization, I’m sure Buffett isn’t happy about it. His silence and Munger’s recent comments make me think they’re very cautious right now, possibly because they think it’s going to get worse and there may be better deals to be had.”
“My guess, he can’t predict the trajectory of this crisis, and so can’t do anything that doesn’t reek of gambling. That’s not his style. I suspect his dealings during the financial crisis were right up his alley. He was younger then and this is a lot messier than a few banks teetering.
He’s probably sitting home, safe, waiting for Munger to say, ‘Let’s do something.'”
“My view is that big daddy Buffett is buying stocks. If you read his and Charlie’s most recent comments, they are careful to dispel the notion that they are grabbing everything up. Which tells me that that’s exactly what they are doing.”
Jowemaha also suggested bailouts could be on the cards in a Reddit thread about Buffett’s moves.
“Just like 2008, Buffett will save companies, do real good for the economy, and make out like a bandit.”
“I can see Buffett establishing greater positions in a number of stocks. Most likely he’s been adding more to his Amazon position. Apple as well.
I’d say JPMorgan is a possibility. As a wild card, he may he developing a position in Google as he’s been an admirer of how entrenched the company is. I also think he’s taking advantage of uncertainty in the oil market to buy more oil producer and energy stocks. Suncor Energy being one perhaps.”
“Buying stocks. He’s always looking for value and there’s plenty of opportunity to find some now. Before all this is over, I expect he will act similarly to 2007-2008 and provide money for businesses in exchange for warrants while also buying stock.
Trimming his airline stakes could mean he’s freeing up some cash for better opportunities. If I were to guess what stocks he was buying, I’d say more banks since the Financial Select Sector SPRD Fund is down 30% for the year. Long-term value to be had.”
“Buffett isn’t waiting for a recession, he’s waiting for the market to reflect a recession. He’s a giant who sleeps through bull markets, and he’s just woken up. Now he’s sitting in his bathrobe, reading the paper and sipping coffee, waiting for the market to reflect the reality of the economy so he can get a big discount.
A lot of people expect him to buy Boeing. That’s a possibility, but Boeing has real business problems that existed before coronavirus. Buffett has always preferred a wonderful business at a good price — Boeing was a mediocre business before the recession.
I find it much more likely Buffett will prefer airline stocks like Southwest, or retail stocks like TJX and Ross, all of which have strong fundamentals and will be in a much better position to recover post-coronavirus, despite being almost equally hard-hit.”
“Berkshire could have bought $10 billion in Amazon stock on the open market in recent weeks and no one would have noticed given its remarkable rally. And it doesn’t have to be Amazon, could have been Apple or Coke or any existing holding.
It also wouldn’t surprise me if he bailed out some companies or helped them as he did with Occidental Petroleum, but I’d discount that idea. There is just too much money being pumped in the system right now, too much easy credit being used or extended. I think the crisis and tight conditions would have to prevail for much longer, and companies really start to bleed, before Warren the shark would go in for the kill.
And maybe Berkshire missed their opportunity! I don’t know, we’ll have to see.”
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