Airlines weren’t the only stocks Warren Buffett soured on during the pandemic. In addition to selling all his airline holdings including Delta and Southwest, which Buffett announced in May, the Berkshire Hathaway investor also dumped his bank stocks, closing his position in Goldman Sachs completely.
Indeed, Buffett did far more selling than buying between April and June, as Berkshire’s quarterly shareholder filing, released Friday afternoon, made clear. As the coronavirus crisis escalated, the celebrated investor added just a single new stock to his Berkshire Hathaway portfolio: Barrick Gold, a Canada-based mining company whose stock price loosely trades in tandem with the price of gold—which has surged this year (up nearly 30%) as investors have sought safe havens. Barrick itself has outperformed the precious metal, with its shares up 45% so far in 2020. Buffett’s Barrick stock is currently worth about $565 million.
Buffett clearly jumped to pull out of stocks most hurt by the coronavirus-related shutdowns. He also sold all his shares in Restaurant Brands International, the owner of fast food restaurants including Burger King and Popeyes, which struggled as customers stayed home more and regional restrictions forced dining rooms to close.
The Oracle of Omaha also dumped all of his Occidental stock during the COVID-19 pandemic—despite his sweet dividend arrangement with the energy company, under which Oxy paid a hefty 8% yield exclusively to Berkshire Hathaway after Buffett’s company backed Oxy’s acquisition of Anadarko last year. As oil prices hit record lows this spring with airplanes grounded and travel at a standstill, energy companies like Occidental have floundered; desperate for cash, Oxy had cut its dividend to its non-Buffett shareholders twice this year, to just a penny per share.
Besides dumping Goldman outright, Buffett sold shares in other banks, cutting his position in JPMorgan Chase by 61%, and trimming his holdings in Wells Fargo and PNC. This year, Goldman has been a bright star in the financial industry, outperforming its Wall Street peers thanks to robust trading profits; and though all bank stocks are in negative territory for 2020, they haven’t lost nearly as much as airlines and energy companies. Buffett may be shying away from banks in anticipation of increasing loan defaults as the economic pain resulting from the pandemic sinks in, which Wall Street CEOs have lately warned of.
It wasn’t all selling over at Berkshire’s Omaha headquarters, though. Buffett added to his position in Kroger, as well as Liberty Media and STORE Capital, a real estate investment trust.
Notable, however, is just how little Buffett bought in the second quarter of 2020. The Berkshire Hathaway investor is famous for his oft-quoted creed, from his 1986 shareholder letter: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Despite the seesawing market volatility of recent months, it doesn’t seem like Buffett has seen enough fear among other investors to make him feel greedy just yet. After all, much of the market is at or nearing all-time highs—though Buffett’s Berkshire Hathaway has fallen behind, down more than 6% so far this year. If the Oracle is right in staying cautious for now, though, investors may find themselves more fearful in the future.