FRI, MAR 06, 2020

WARREN BUFFETT WATCH

Coronavirus won't stop the Buffett/Munger Show

Berkshire Hathaway's annual meeting, which usually brings as many as 40,000 people to Omaha, is just two months away.

Even as we've seen a number of big events get canceled due to COVID-19 fears, (including the announcement late today that Austin is shelving the big SXSW festival), Berkshire says the show will go on, although it may not be as big as usual.

In a "special announcement" this week, the company said:

"The Berkshire Hathaway Annual Shareholders Meeting will be held on
May 2, 2020 irrespective of conditions at that time. The scope of the
meeting and associated activities may be modified by circumstances at
the time, but we have no present plans to do so."

Photo by Orjan F. Ellingvag/Corbis via Getty Images

In recent years, roughly 5,000 people have come to Omaha form China, where Buffett is widely admired.

Last week, he told The Omaha World-Herald many shareholders may stay away. “It really depends upon the psychology of the moment. If people are worried about travel in late April, you can be sure it will affect attendance.”

Cramer: Buffett's 2008 "Buy American" advice is still good today

In the opening section of "Mad Money" yesterday (Thursday), Jim Cramer brought back Warren Buffett's "Buy American, I am" New York Times op-ed published at the height of the 2008 credit crisis.

In it, Buffett acknowledged the financial world was a "mess," with rising unemployment, faltering business activity, and scary headlines still to come.

"So ... I've been buying American stocks," he wrote.

Why? "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

Today, coronavirus fears are sending stocks sharply lower. It sure feels like we could be facing rising unemployment, faltering business activity, and, especially, more scary headlines.

In his CNBC appearance a week ago Monday, Buffett was unfazed. We compiled a video of the seven different ways in those three hours alone when he said, essentially, "Don't panic!"

Cramer agrees: "I’m going with Warren Buffett. He was dead right in 2008, even if his timing — well, let’s just say he was ill-advised — maybe left a little bit to be desired. I think he’s going to turn out to be right this time, too.”

(Buffett's 2008 op-ed was published in October but stocks didn't bottom until March.)

But Cramer advises, “Just, please, if you’re going to buy, buy gradually on the way down.”

Cramer Part Two: "I'm never going to go against Warren"

In the "Lightning Round" of last Friday's "Mad Money," a 14-year-old investor asked Cramer if he should add Berkshire to his "tech heavy" portfolio for "less risk."

Cramer's reply: "It's been a -- I hate to say it -- but it's been a bit of a underperformer. But I'm never going to go against Warren, and I think your time frame's going to be right. It's a pretty ugly chart. But go ahead, do that. You know, 14-year-olds getting in, that is the way of the future. I love it."

Berkshire adds to Delta stake, but it's not a buying spree

Depending on where you get your business news, Berkshire Hathaway "boosted" its stake in Delta Air Lines ... or its holding "swelled" ... or it "scooped up" or "snapped up" more shares ... as airline stocks dropped in price due to fears COVID-19 will keep people off planes.

While the purchases are being seen as an example of Buffett's "Be Greedy" investing rule, they are not illustrative of another of his sayings: "When it's raining gold, reach for a bucket, not a thimble."

The February 27 purchases of almost 977 thousand shares at an average price of $46.40 works out to just $45.3 million. That's pocket change by Buffett standards.

Berkshire's Delta share count increased by 1.4% to 71.9 million. It now holds 11.2% of Delta's outstanding shares, compared to 11.1% previously. The market value tonight is almost $3.3 billion.

There could have been more buys after February 27 that haven't been filed yet with the SEC, so we still may see Buffett's bucket. So far, however, it looks more like a thimble's worth of buying.

Berkshire pulls $3B financing for controversial gas pipeline in Canada

Protests against energy projects in Canada, including blockades of rail lines, appear to have played a part in Berkshire Hathaway's decision to abruptly pull $3 billion in financing for a pipeline that would bring natural gas from Alberta to a port in Quebec.

A spokesman for Énergie Saguenay, the company leading the project, said a "major private investor ... decided at the last minute to not proceed," citing "Canada's current political context."

Ontario Provincial Police and First Nations protestors sit on opposite sides of a barricade on Highway 6 near Caledonia, Ontario which the protestors set up, in support of the Wet'suwet'en hereditary chiefs and the Tyendinaga Mohawks on February 26, 2020. - Canadian police on February 24, 2020 cleared out indigenous protesters blocking a key east-west rail artery for nearly three weeks to protest a pipeline, causing major disruptions to the economy. The protesters, confronting Prime Minister Justin Trudeau with a political crisis, had mounted the blockade on a Canadian National Railway line east of Toronto and at other places in support of a small group fighting construction of a natural gas pipeline on indigenous lands in British Columbia. Photo by GEOFF ROBINS/AFP via Getty Images)

That investor has been identified in numerous reports, including The Globe and Mail and The Wall Street Journal, as Berkshire.

The Globe and Mail notes that a number of energy projects have been encountering "hurdles caused by low oil and gas prices, political opposition and resistance from Indigenous people and environmentalists."

Brazilian stock plunges as Berkshire denies it holds a stake

Berkshire Hathaway took the unusual step of denying it is a shareholder of IRB Brasil Re, chopping one-third off that company's stock price.

In a news release, Berkshire said stories in the Brazilian press that it had invested in IRB are wrong. Berkshire is "not currently a shareholder of IRB, it has never been a shareholder of IRB and it has no intention of becoming a shareholder of IRB."

Reuters reports analysts are criticizing the company "for having confirmed ... that Berkshire Hathaway International Insurance Ltd was an investor in the company and had recently increased its stake."

Bloomberg's Matt Levine calls it a case of trying to steal Buffett's "halo," the boost a stock can get from news Berkshire is a buyer because it's seen as a "seal of approval" from the Oracle.

Last January, when Boeing was up on "chatter" Buffett was building a stake, Berkshire directed us to item #13 in its Owner's Manual.

Since good investment ideas are rare, it says, "we normally will not talk" about them. "This ban extends ... to stocks we are incorrectly rumored to be buying. If we deny those reports but say 'no comment' on other occasions, the no-comments become confirmation."

While Berkshire can live with rumors, it appears it won't put up with a company's management making false claims.

BUFFETT AROUND THE INTERNET

Some links may require a subscription