Berkshire Hathaway returns to airlines with $2.6 billion stake in Delta Air Lines
Berkshire Hathaway, led by legendary investor Warren Buffett, made a significant move by adding a substantial stake in Delta Air Lines, signaling its return to the airline industry. This decision comes after Berkshire completely exited the sector amidst the Covid-19 pandemic in 2020. The conglomerate’s investment in Delta now amounts to over $2.6 billion, making it Berkshire’s 14th-largest holding as of March.
Six years ago, Buffett surprised investors by selling off Berkshire’s entire equity portfolio in U.S. airlines, including United, American, Southwest, and Delta Air Lines. He cited the pandemic’s impact on consumer behavior and travel patterns as the reason for the divestment. However, Berkshire has now re-entered the airline industry with its stake in Delta.
In addition to the Delta investment, Berkshire made other notable moves in its portfolio. The firm reduced its stake in Chevron while significantly increasing its position in Alphabet, making the Google parent company Berkshire’s seventh-largest holding.
Furthermore, Berkshire initiated a small position in Macy’s, valued at around $55 million by the end of the first quarter. This diversification of investments showcases Berkshire’s strategy to capitalize on various sectors and opportunities in the market.
On the other hand, the conglomerate unwound several positions last quarter, likely in connection to the departure of investment manager Todd Combs. Combs, who left for JPMorgan, was responsible for overseeing a portion of Berkshire’s equity portfolio. Among the stocks sold were Mastercard, Visa, Amazon, UnitedHealth Group, Aon, Pool Corporation, Domino’s Pizza, and Charter Communications.
Despite Buffett stepping down as CEO, he remains actively involved as chairman of Berkshire. The new CEO, Greg Abel, consults with Buffett on investment decisions and capital allocation, including the recent resumption of buybacks in the first quarter. However, Buffett has expressed dissatisfaction with the current investment landscape as Berkshire’s cash reserves reach a record high of nearly $400 billion.
As Berkshire continues to navigate the ever-changing market conditions, investors closely watch the conglomerate’s strategic moves under the leadership of Buffett and Abel. The recent developments in Berkshire’s portfolio reflect a mix of continuity and change, showcasing the dynamic nature of one of the world’s most renowned investment firms.
