Warren Buffett's Berkshire makes surprise U.S. airline bet

Warren Buffett's Berkshire makes surprise U.S. airline bet

By Jonathan Stempel and Jeffrey Dastin | NEW YORK
Mon Nov 14, 2016 | 8:12pm EST

Warren Buffett's Berkshire Hathaway Inc on Monday said it has bought shares in the four biggest U.S. airlines: American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co and United Continental Holdings Inc.

The investments mark an unexpected reversal for Berkshire, which has avoided the airline sector for nearly two decades after a troubled investment in the former US Air Group, a forerunner to American.

They also expand Berkshire's bet on the U.S. economy, and in particular transportation. Berkshire already owns the BNSF railroad and the NetJets luxury plane unit, and in January paid $32.1 billion for aircraft parts maker Precision Castparts.

More details in http://www.reuters.com/article/us-invest...SKBN1392IS

make America great again is starting with air transportation market share control!!

(15-11-2016, 01:43 PM)cyclone Wrote: Warren Buffett's Berkshire Hathaway Inc on Monday said it has bought shares in the four biggest U.S. airlines: American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co and United Continental Holdings Inc.

The investments mark an unexpected reversal for Berkshire, which has avoided the airline sector for nearly two decades after a troubled investment in the former US Air Group, a forerunner to American.

They also expand Berkshire's bet on the U.S. economy, and in particular transportation. Berkshire already owns the BNSF railroad and the NetJets luxury plane unit, and in January paid $32.1 billion for aircraft parts maker Precision Castparts.

More details in http://www.reuters.com/article/us-invest...SKBN1392IS

This is unexpected indeed coming from him who has been critical of airline business. But he also invested big time in IBM despite saying he doesn't know much about tech sector and has avoided tech companies. 

Interesting to note, Berkshire has just recently bought the aerospace parts manufacturing company Precision Castparts, perhaps he is now aiming for control of aerospace sector and wants to create synergy along that industry. Precision castparts 3/4 revenue is from aerospace, 1/4 is from energy sector. 

Remember how he acquired the reinsurance/insurance company to insure his own stable of companies at lower cost in the past.

Maybe next target will be Boeing shares lol...

Buffett sells airline stocks, and looking ahead to next week's trading
https://m.youtube.com/watch?v=fa2H0ay42Is

(04-04-2020, 09:18 AM)Behappyalways Wrote: Buffett sells airline stocks, and looking ahead to next week's trading
https://m.youtube.com/watch?v=fa2H0ay42Is

Hahaha cut losses   Buffetts original criticism of airline stock investments as a bad choice seems to be correct ..

Those vested in SIA and airline related industries got to consider if they want to sit tight and share the 'pain' or sell first and see how things work out. It probably will take a while for the industry to recover and by then most probably the share price will be much lower than present.

My two cents worth. Not vested.

The key lesson that i learnt from Warren Buffett, is practice evolution.

American airlines were able to transform from "capital-sucking black holes" into "oligopolies". The latter has great competitive moats and WB was able to recognize that earlier than most of us. It is such a simple "As the facts change, i change my mind" type of thing that is not easy to do. As investors, we expect the companies we invest in to be able to change and evolve with changing market environments, but yet at the same time, if we stuck to the same methods without our own practice evolution, it is really an irony.

Airlines are still great businesses as long as the oligopoly structure remains. Ditto GFC2008, consolidation of financial services back then meant that even better economics appear after the crisis as market participants disappear - The same pie shared among less people, perfect. Personally, I would be on the look-out for market consolidation, bail outs and sorts. From an investing standpoint, the opportunities are endless and exciting!