Home ›› 03 May 2020 ›› World Biz
Warren Buffett's company, Berkshire Hathaway Inc, posted a record quarterly net loss of about 50 billion US dollars on Saturday, as it is being slammed hard by the Covid-19 pandemic.
The company added performance was suffering in several major operating businesses.
Berkshire said most of its more than 90 businesses are facing "relatively minor to severe" negative effects from Covid-19, the illness caused by the novel coronavirus and now punishing the global economy, with revenue slowing considerably in April even at businesses deemed "essential."
The BNSF railroad saw shipping volumes of consumer products and coal fall, while Geico set aside money for car insurance premiums it no longer expects to collect. Some businesses cut salaries and furloughed workers, and retailers such as See's Candies and the Nebraska Furniture Mart closed stores.
Buffett also allowed Berkshire's cash stake to rise to a record $137.3 billion from $128 billion at the end of 2019.
That reflected the 89-year-old billionaire's inability to make large, "elephant" size acquisitions for his Omaha, Nebraska-based conglomerate, and caution in buying stocks.
Berkshire said it bought only a net $1.8 billion of stocks in the first quarter. It also said it repurchased $1.7 billion of its own stock, but that was less than in the prior quarter.
"Historically, Buffett has been so visible in times of crisis, and encouraged investors to take advantage of market selloffs, but if he doesn't see opportunities even in his own stock, what are we to think?" said Jim Shanahan, an analyst at Edward Jones & Co in St. Louis.
Still, Shanahan said Berkshire is "as well positioned as it can be," reflecting its diverse businesses and substantial liquidity and access to capital. He rates Berkshire "buy."
Berkshire released results before its annual meeting, where Buffett said Berkshire in April sold its "entire positions" in the four largest U.S. airlines: American, Delta, Southwest and United.
Buffett said Berkshire "made a mistake" investing approximately $7 billion to $8 billion in the sector, which was changed "in a very major way" as the pandemic shut down most air travel, through no fault of the airlines.
The meeting was streamed on Yahoo Finance. It was held without the usual "Woodstock for Capitalists," a weekend of festivities that normally draws tens of thousands of people to Omaha, and which Buffett canceled because of the pandemic.
(Source: NDTV)
/teb
