Warren Buffett Defends Berkshire’s Moves Over Pandemic Year

Berkshire Hathaway Inc. Chairman and Chief Executive

Warren Buffett

defended the company’s investments over the past year, as the coronavirus pandemic initially drove a plummet in stocks before the market turned around and surged to record highs. A year ago, as the pandemic took hold, Mr. Buffett sold all of his holdings in major airlines. He also lowered his stakes in several banking firms and didn’t make any large acquisitions even as markets were falling sharply. Since then, the airline industry has been one of the largest to bounce back, and the broader market has surged. Shareholders have questioned whether Mr. Buffett was active enough during a potentially opportunistic time.

“I don’t consider it a great moment in Berkshire’s history but we have more net worth than any company on Earth,” he said.

“And I still don’t want to own the airline business.”

Mr. Buffett said the decision to cut back on airlines reflects a broader belief about the future of the industry, particularly when it comes to what is likely to happen to business travel.

Mr. Buffett addressed several other questions Saturday, including the decision to hold the meeting in Los Angeles, and commented on the company’s quarterly earnings.

He gave some advice to the wave of new traders who have come to the market in the past year. He said that a hundred years ago, it was clear that cars would be the future. Since then, there have been more than 2,000 companies in the car-making business that have gone under.

“There is a lot more to picking stocks than figuring out what is going to be a wonderful business in the future,” said Mr. Buffett.

As the 90-year-old Mr. Buffett and his 97-year-old business partner,

Charlie Munger,

advance in age, succession has become a more important topic for shareholders. Some investors have asked to hear more from Mr. Buffett’s potential successors and vice chairmen,

Ajit Jain


Greg Abel,

who respectively oversee the firm’s insurance business and operations.

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Both men joined Messrs. Buffett and Munger in Los Angeles.

The backdrop for Saturday’s meeting is in contrast with Berkshire’s virtual meeting last year, when the U.S. was in the early grips of the Covid-19 pandemic. With millions of Americans unemployed, Mr. Buffett spent much of the 2020 meeting emphasizing the economy’s ability to bounce back from adversity.

A year later, Mr. Buffett is speaking as the U.S. economy has broadly improved and 30% of Americans are fully vaccinated against the coronavirus. The Omaha, Neb., conglomerate reported strong profits for the first quarter earlier in the day thanks to insurance and stock-market gains.

Berkshire runs a large insurance operation as well as railroad holdings, utilities, industrial manufacturers, retailers and auto dealerships. It also holds large investments, especially in the stock market. The diversity of Berkshire’s operations means Mr. Buffett is in a unique position to discuss both the state of the economy and markets.

Mr. Buffett has built his sprawling conglomerate as a vehicle for investors interested in long-term gains. As such, Berkshire operates a variety of different businesses that Mr. Buffett thinks will stand the test of time. The company also invests the float from the premiums its insurance customers pay.

Still, Berkshire faces some heightened pressure this year. Some of its shareholders want the conglomerate to bring in new directors and disclose more information on climate risks and executive pay. The company’s returns have trailed the S&P 500 for the past five-year period.

Berkshire’s Class A shares closed Friday at $412,500, a decline of 1.3%.

Write to Geoffrey Rogow at geoffrey.rogow@wsj.com

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