It was only a couple of weeks ago that we looked at Warren Buffett’s 2019 letter to shareholders – a lot has happened between then and now.
In that piece, point two (“Acquisition discipline is key”) remains particularly relevant. Certain high profile Berkshire shareholders have expressed disappointment at the company’s lack of significant acquisitions over the past four years, but that c$130bn cash pile must look a lot more enticing now.
In recent years, Berkshire has been frustrated in its aim to buy good companies at attractive valuations. Given recent dramatic price moves, however, it is worth noting that Berkshire’s response has been to spend around $45m on Delta Air Lines shares. In upping its stake in Delta, Berkshire is living up to that famous mantra: “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”.
But is this actually the time to be buying airlines? It looks like there is more short term disruption to come. If any contrarians out there are tempted, I would encourage caution and a keen focus on financial health.
Stock market Darwinism: how bad markets can help good operators
Let’s just get this out of the way: airline stocks are particularly risky investments. Low barriers…
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