Investing

7 Investments That Will Make or Break Warren Buffett in 2019

Even considering that this was shrinking as a stake, the latest Berkshire Hathaway earnings report showed the Wells Fargo holding worth some $24.4 billion. That had been worth of $30 billion at one point but was valued closer to $21 billion at the end of 2018. The September 2018 stake was 442.3 million shares, down from 452.0 million in June and from 456.5 million prior to that.

Buffett had been a key supporter of Wells Fargo for many years, but now he has communicated that he wants to keep his positions under the 10% shareholder mark to ease his regulatory filing status. His stake was last shown to represent almost 9.2% of the outstanding Wells Fargo shares.

Flying the Airliners

A last postion of Buffett and his portfolio managers has been a sector-wide investment made into the airlines. While it is technically four stocks, the reality is that this was one sector-wide investment made and should effectively be treated as a single investment in a make-or-break analysis.

Buffett used to say he would never invest into an airline, but his portfolio managers saw a chance that airlines would be valued higher and have less of the boom-bust business cycles ahead now that the sector of legacy carriers has consolidated over the past decade. Buffett and his team have made small changes to their airline stock holdings in 2018, but the combined value of these four stakes was close to $10 billion on last look. That said, the drop from the peak here has been sharper than Buffett and his portfolio managers would have expected, with an average drop of close to 30% from the peak. Here are the positions in each airline holding at the end of last September, with a note on whether the stake has changed over time.

  • American Airlines Group Inc. (NASDAQ: AAL) was a slightly smaller stake of 43.7 million shares in late 2018, down from 44.7 million shares last quarter and making a second quarterly stake change. Sadly, this has fallen 45% from the 2018 high.
  • Delta Air Lines Inc. (NYSE: DAL) was a larger stake of 65.54 million shares in 2018, up from 63.67 million shares in June and from almost 54.0 million shares in March. Shares of Delta were seen down almost 30% from the 2018 peak value.
  • Southwest Airlines Co. (NYSE: LUV) was a slightly smaller stake of 56.05 million shares last September. That compares with the 56.54 million shares at the end of June but is still larger than the 47.66 million shares in an earlier report. Southwest shares also were down almost 30% from their 2018 peak value.
  • United Continental Holdings Inc. (NYSE: UAL) was listed as 25.98 million shares, down from 26.684 million shares in June and 27.7 million shares in March. The shares were seen down 15% from the 2018 high.

Buffett may not be happy to see the value of his public holdings dwindle so fast, but he didn’t make his fortune on short-term market calls. Buffett looks very long term in many cases, and he would remind investors that it is good to be fearful when others are greedy and greedy when others are fearful. He also would tell investors that he his own opinions and ways of valuing a company over time that might differ greatly from how Wall Street analysts would value it.

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