2020 Berkshire Hathaway Annual Meeting: 3 Key Takeaways

This article contains three key elements that came out of the four and a half hour discourse of The Berkshire Hathaway annual meeting took place in Omaha.

1. Buffett opened the event with general remarks pertaining to the economy and highlighted the Civil War which came about when the U.S. was still less than 75 years of age and which was a time when around 6% of the population of males between the ages 18 and 60 were killed. In today’s terms, he noted that this would be the equivalent of four million deaths, were the COVID-19 pandemic to hit as hard in relative terms.

Buffett both opened and closed his discourse with his favorite, simple message: "Never Bet Against America".

2. Buffet indicated that BRK sold ~$6.5B worth of equity securities, encompassing the company’s entire stake in four major airlines — America Airlines Group Inc. (AAL),
 United Airlines Holdings, Inc. (UAL),
Delta Air Lines, Inc. (DAL), and
Southwest Airlines Co. (LUV).

One thing Buffett made clear is that this move is not a general remark on his sentiment about the stock market in general. This was the very specific liquidation of a large position which in his ability to understand after Covid happened was simply a mistake.

It was a low probability event that has taken hold which was based on no fault of the airline companies.

3. A viewer asked why BRK has not acted as a lender of last resort through this crisis. Buffett’s response was that they have not seen anything attractive, particularly in the context that he believes the Federal Reserve has acted responsibly through this period which has provided the necessary support to markets along the way. This has created less opportunity for BRK to swoop in as it has in the past to opportunistically make deals.

Another issue raised that BRK was not buying back its own stock at deeply discounted prices (i.e., 30% from peak) when those occasions availed themselves. Buffett appeared to suggest that BRK is still preparing itself for a further downturn and that although it may be possible to buy back stock at a lower price, this must always be balanced against the option value of money.

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