Will Warren Buffett Course Correct on Bitcoin Like He Did with Airline Stocks?

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In Brief
  • Warren Buffett's Berkshire Hathaway has unloaded nearly $400 million worth of airline shares in recent days.

  • In March, Buffett reportedly said he would not sell airline stocks.

  • Could he reverse course on Bitcoin too?

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Warren Buffett has proven he can change his mind after all. The billionaire investor has reportedly dumped nearly $400 million worth of airline shares in recent days after previously committing to see it through despite turbulence. Even Buffett, who has denounced Bitcoin and all cryptocurrencies, has his limits. Now that that Buffett has proven that he could remain nimble in his other investments, is there hope for him yet when it comes to Bitcoin?

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According to SEC filings, Buffett’s conglomerate, Berkshire Hathaway, has unloaded approximately $390 million worth of airline shares in recent days, slashing his stakes in Delta and Southwest by roughly 20% and 5%, respectively. [Business Insider] Apparently Buffett had seen enough after the sector has become ground zero for the economy amid travel restrictions, canceled flights, cash burn and cries for help to Uncle Sam for coronavirus-fueled federal grants.

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Buffett’s 180-degree turn

What a difference a month makes. It was just March when Buffett maintained that he would not be bailing on the airlines, telling Yahoo Finance at the time,

“I won’t be selling airline stocks.”

Perhaps Buffett got spooked by Southwest canceling more than 1,000 daily flights. Or maybe he heard about an airline passenger who got the entire plane to herself on a flight from Washington, D.C. to Boston because of waning demand due to coronavirus. That had to send a strong message to the mostly tech-averse investor.

To be fair, Buffett hasn’t liquidated his entire airline portfolio, so he could still experience some more pain. As a result, we could see more selling still.

Bitcoin to the Rescue?

With all of that freed up capital, Buffett could be looking for a place to park it. And if he could reverse course on equities, perhaps there is hope yet that Warren Buffett — who once referred to Bitcoin as rat poison squared — could find a place in his portfolio for cryptocurrencies.

While airlines like Delta and Southwest come face to face with their solvency, Bitcoin has been on a tear of late. BTC may be down for the year, but it’s knocking on the door of $7,000 again and the typically bullish halving event is mere weeks away. Besides, it’s only Q2, which incidentally is historically strong for the flagship cryptocurrency.

After a recent meeting with Justin Sun, Buffett told CNBC that his mind was not changed, saying in February:

“Cryptocurrencies basically have no value, and they don’t produce anything.”

One of the sticking points for Buffett on cryptocurrencies is they can’t mail you a dividend check. With the airlines now pounding on the government’s door for a bailout, investors probably shouldn’t expect any payouts or share buybacks in the near future either.

Truth be told, we may never see the day that Mr. Buffett changes his mind on Bitcoin or any other digital currency for that matter. At 89 years old, Buffett is pretty set in his ways, investing in companies whose business models he understands. Perhaps Greg Abel or Ajit Jain, who are rumored to be possible successors to Buffett at Berkshire, will take a different view.  [CNBC] Hope springs eternal.

 

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Gerelyn caught wind of bitcoin in mid-2017, and after becoming smitten by the peer-to-peer nature of crypto has never looked back. She has been covering the space ever since. Previously, she wrote about traditional financial services, Wall Street and institutional investing for much of her career. Gerelyn resides in Verona, N.J., just a hop, skip and a jump from New York City.

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