Warren Buffett’s latest trades were just revealed via the most recent Berkshire Hathaway Inc. (BRK.B) 13F filing, which is a filing that gives us information on all of the transactions that took place over the first quarter of 2020 — the quarter ending March 31 — in the stock portfolio managed by the legendary investor.

This filing can provide some valuable insight into where Warren Buffett thinks the best investments might lie.

Now, it might not make sense to piggyback on his trades and simply buy and/or sell whatever he has because these filings are generally released 45 days after the most recent quarter ended, but it would appear to be an intelligent move to investigate exactly where the most successful investor of all time is (and isn’t) putting his capital to work.

It’s also important to note that Buffett allows two other executives – Todd Combs and Ted Weschler – to authorize smaller transactions, so it’s difficult sometimes to decipher who bought and/or sold what.

Below, I’m going to go over every transaction and give some quick thoughts on each respective company.

I’m going to do my best to infer what each purchase and sale means, but it’s obviously impossible to know exactly what Warren Buffett or his lieutenants were thinking when each transaction was executed.

Let’s take a look!

Please keep in mind this list is for informational purposes only, and is not a recommendation to buy any specific stocks.

Purchases

Purchased 526,930 shares of PNC Financial Services Group Inc. (PNC)
Purchased 976,507 shares of Delta Air Lines, Inc. (DAL) – UPDATE: HAS SINCE SOLD OUT, SEE TRACKER
Purchased 218,966 shares of United Airlines Holdings Inc. (UAL) – UPDATE: HAS SINCE SOLD OUT, SEE TRACKER

Sales

Sold 227,436 shares of Phillips 66 (PSX) – SOLD OUT
Sold 312,379 shares of Travelers Companies Inc. (TRV) – SOLD OUT 
Sold 4,000 shares of Amazon.com, Inc. (AMZN)
Sold 5,425 shares of Biogen Inc. (BIIB)
Sold 470,000 shares of Davita Inc. (DVA)
Sold 319,000 shares of General Motors Company (GM)
Sold 10,084,571 shares of Goldman Sachs Group Inc. (GS)
Sold 1,800,499 shares of JPMorgan Chase & Co. (JPM)
Sold 240,000 shares of Liberty Media Sirius XM C Shares (LSXMK)
Sold 3,857,000 shares of Sirius XM Holdings Inc (SIRI)
Sold 70,000 shares of Suncor Energy Inc. (SU)
Sold 675,000 shares of Synchrony Financial (SYF)
Sold 460,000 shares of Teva Pharmaceutical Industries Ltd. (TEVA)
Sold 137,132 shares of Verisign, Inc. (VRSN)
Sold 194,000 shares of Axalta Coating Systems Ltd. (AXTA)
Sold 481,000 shares of Liberty Global LiLAC-A (LILA)
Sold 84,062 shares of Liberty Latin America Series A (LBTYA)

Purchases

PNC Financial Services Group Inc. (PNC) – Purchased 526,930 shares. 

This purchase increased Berkshire Hathaway’s stake by 6.1%, now up to 9,197,984 shares.

PNC Financial Services Group Inc. is a bank holding company and financial services corporation that operates in 19 states and the District of Columbia.

Buffett’s fondness for banks is long known, and PNC is one of the best regional banks out there. With a market cap of over $40 billion, it’s actually a very large regional bank.

PNC has more than doubled its EPS over the last decade. Up until the pandemic hit, the bank was printing some of the best numbers it ever has. Profitability was through the roof. It was firing on all cylinders.

Of course, we now know that the entire world has been flipped upside down, and this will directly impact banks like PNC. Banks, in my view, are on the more aggressive end of the risk spectrum here.

On the other hand, PNC’s stock is deeply in value territory, with a P/E ratio of ~9. The stock is trading hands for less than book value, and the yield is over 4.7%.

Unless one believes the bank simply won’t survive (which seems highly unlikely), the stock looks attractive on a valuation and quality basis right now. I wouldn’t make this bank (or any bank) a huge holding in my portfolio, but nibbling doesn’t seem like a bad idea at all.

Banks are in the “eye of the storm” right now. They’re heavily exposed to pandemic-related losses. But they should also be some of the biggest beneficiaries of a recovery.

Delta Air Lines, Inc. (DAL) – Purchased 976,507 shares. 

The portfolio tracker shows 0 shares for the Delta Air Lines position, as Berkshire Hathaway has sold out of this position in Q2 2020.

Delta Air Lines, Inc. is a major US airline company.

Well, the cat is already out of the bag on this one.

Warren Buffett was squarely behind the airline investments. And he also told us at Berkshire Hathaway’s meeting, held in early May, that he sold out of all airline holdings for Berkshire Hathway in the second quarter.

So instead of talking about this purchase, we should talk about the sales.

This was clearly a very quick (and large) about-face for Buffett, as he went from adding more shares to selling out within a matter of weeks. That’s highly unusual. But everything about the last few months have been unusual. We’re in the middle of one of the biggest health and economic crises the world has ever seen.

It honestly struck me as odd that Buffett invested so heavily into the airlines in the first place. At their combined peak, airline stocks represented something around 4% of the entire Berkshire Hathaway portfolio. That’s utterly shocking, especially considering that Buffett has long been so critical of the industry.

While industry consolidation and a global thirst for tourism has been a boon for airlines over the last decade, it’s still a tough industry to invest in due to huge cyclical swings and high fixed costs. Plus, there’s always that black swan risk, like we’ve seen with 9/11 and COVID-19.

I personally built a very small position in Delta Air Lines, if only because I thought this stock in particular was the best house in a questionable neighborhood. It offered value, yield, dividend growth, impressive fundamentals, and exposure to a global megatrend. But I never saw it as a big investment. Certainly not 4% of my portfolio.

Berkshire’s foray into airlines has obviously come to an end.

As for us regular investors, I’m not sure there’s a lot we can take away from this. Buffett got too heavy with the airlines, and he’s clearly and correctly recognizing that the industry is in a tough spot for a long while. Some of these airlines are fighting for survival at this point, so investing for growth (at least for the next year or two) is out of the question.

If you think some of the airlines will survive (I do), then they’re extremely cheap stocks right now. I would make sure to stick to the quality names (like Delta Air Lines), however. And I’d be careful about overall exposure relative to the entire portfolio.

That said, you have to have a long-term time horizon. It could be years before the airlines are back to any kind of normal operating metrics. If that requires too much patience, I wouldn’t even think about investing in airlines here.

United Airlines Holdings Inc. (UAL) – Purchased 218,966 shares. 

The portfolio tracker shows 0 shares for the United Airlines Holdings position, as Berkshire Hathaway has sold out of this position in Q2 2020.

United Airlines Holdings Inc. is a large American airline company.

What I just noted above about Delta Air Lines applies to United Airlines Holdings.

Berkshire Hathaway has completely sold out of this position already.

Sales 

Phillips 66 (PSX) – Sold 227,436 shares. 

Berkshire Hathaway has completely sold out of this position.

Phillips 66 is primarily an independent refiner, with assets in midstream and chemicals.

Here’s what I said in last quarter’s update on Berkshire Hathaway holdings:

“I’ve stated in prior updates that it appears that Berkshire Hathaway is systematically selling out of its stake in Phillips 66. Continuous sales have foreshadowed this. The only thing that surprises me here is that Berkshire Hathaway didn’t completely sell out of its position. That will likely come next quarter.”

So here we are. The next quarter has arrived. And as I predicted, they’ve completely sold out of this position.

I’m still not quite sure what prompted Buffett to begin selling out of their stake in Phillips 66. He’s expressed optimism about the business publicly. But he’s clearly less enthusiastic about it in private.

I will say that I’m publicly and privately optimistic about Phillips 66 over the intermediate term.

As I said above, all major oil companies – that goes for downstream players, too – are facing tough headwinds over the long haul, and I see them as great investments for an intermediate time frame. I’m thinking 10-20 years. Beyond that, I do see the world more aggressively transitioning away from these energy products. And that makes sense. We simply cannot allow society to forever rely on an energy source that is finite and dwindling. It’s nonsensical to not advance.

With that in mind, this stock is down more than 35% YTD. Its P/CF ratio is less than half its three-year average. And the stock’s yield, at over 5%, is over 200 basis points higher than its five-year average.

It’s a beaten-down stock, but the business is still about as high quality as it gets in the industry. If you want a cheap refiner, Phillips 66 should absolutely be on your radar.

Travelers Companies Inc. (TRV) – Sold 312,379 shares. 

Berkshire Hathaway has completely sold out of this position.

Travelers Companies Inc. is a holding company that, through its subsidiaries, provides commercial and personal property and casualty insurance products to individuals, businesses, government units, and associations.

Berkshire Hathaway initiated their position in Travelers Companies in Q3 2018, then followed that up with another large purchase in Q4 2018. They started to sell out of that position in late 2019, getting rid of over 5.6 million shares in Q4 2019.

The stock was actually priced much more advantageously in the summer of 2019. It went as high as $155/share in July before falling somewhat precipitously during the second half of 2019. And it’s even lower now. So the timing of all of this is odd.

It’s also odd that Berkshire Hathaway would build up a position in a business only to so quickly start to tear it down. That’s especially odd since this is an insurance business, which is arguably Berkshire Hathaway’s specialty.

Someone at Berkshire Hathaway clearly started to sour on this investment in late 2019, and they made good on that new attitude with the disposal of the rest of the stake.

I personally see Travelers as a solid and well-run insurance business. And with a P/E ratio below 10, as well as a P/B ratio below 1, the stock is very cheap.

However, it’s difficult to tell how much risk some of these P&C insurance businesses face in terms of pandemic liability and how clauses in contracts will ultimately affect them. Berkshire Hathaway already has a lot of insurance exposure of their own to tangle with, so it probably makes sense to cut back on risk.

The rest of us mere mortals don’t have entire insurance operations to worry about, though.

And I think this is an attractive long-term idea in the insurance space.

I wouldn’t go crazy with this stock. But it is a cheap and high-quality dividend growth stock, and the 34% drop YTD seems to price in a lot of risk that may not manifest itself.

Amazon.com, Inc. (AMZN) – Sold 4,000 shares. 

This sale reduced Berkshire Hathaway’s stake by 1.1%. They now own 533,300 shares.

Amazon.com, Inc. is a large technology and retail company with operations in e-commerce, cloud computing, AI, and digital streaming.

Now that we’ve gotten the sales of Phillips 66 and Travelers out of the way, which were expected, we can move into the rest of the sales.

Before I comment on Amazon.com stock specifically, I’ll note that Berkshire Hathaway was abnormally active this month in terms of stock sales. So I’ll be framing my commentary around that.

The theme for this quarter is: “liquidity”.

In my view, that’s Buffett telling us that he sees a lot of challenges ahead for both the economy and the stock market, and he probably believes that it’ll be a long time before the market recovers.

Indeed, he spent a good portion of this year’s unusually somber Berkshire Hathaway annual meeting discussing the Great Depression and how long it took for the American recovery to play out. It seems to me that he’s drawing parallels between that period and this period.

What’s surprising here is that Berkshire Hathaway already has a lot of cash. They entered Q1 with over $125 billion in cash. To be raising even more cash, particularly when Buffett is known to be an eternal optimist that likes to pounce on opportunities, is speaking volumes about how Buffett truly feels.

On the other hand, I don’t think it’s unreasonable to think that Buffett is just as well loading up on cash to strike one more major deal before his legendary career is finally over. I think he’d love to hunt down one last “elephant” before he sails off into the sunset. And that would mean focusing less on common stock and more on an entire businesses outright.

In addition, he’d probably feel a lot better about leaving Todd and Ted plenty of capital to work with and build their own legacies for Berkshire Hathaway shareholders. At almost 90 years old, Buffett is never going to be the aggressive investor he was when he was 20 or 30.

I’ll just note here, before discussing Amazon.com and the remainder of these sales, that I’d be careful to use Buffett’s viewpoint as your own. You’re not running a $400 billion conglomerate with substantial insurance obligations at almost 90 years old. If you’re still building your snowball and trying to achieve financial independence through wealth/passive income, I’d be looking at the market’s short-term volatility as a long-term opportunity.

Speaking to Amazon.com specifically, I really am surprised to see this sale.

Berkshire Hathaway initiated their position in Amazon.com in Q1 2019. A year later, they’re reducing.

With the stock up considerably in Q2, and with Amazon.com profiting handsomely from stay-at-home orders, Berkshire Hathaway might want to be cautious about reducing that stake further.

The stock isn’t at all cheap when looking at traditional valuation metrics. If anything, it looks downright expensive – even for the growth.

Furthermore, with a market cap north of $1 trillion, the law of large numbers has to work against this business at some point.

But if you already have a stake in Amazon.com, and you were able to procure those shares at a much lower cost basis, I’d absolutely be holding onto that stock right now.

Biogen Inc. (BIIB) – Sold 5,425 shares.

This reduced Berkshire Hathaway’s stake down to 643,022 shares, which is 0.8% lower than last quarter.

Biogen Inc. is a global biotechnology company specializing in the discovery, development, and delivery of therapies for the treatment of neurological diseases to patients worldwide.

Berkshire Hathaway initiated their position in Biogen in Q4 2019. One quarter later, they’re selling. Again, very odd timing. But this is an odd world we’re living in.

We could argue there’s some profit taking in a world where profit taking isn’t always available – this is one of the rare stocks that is up handily YTD. With a nice spike in early February, Berkshire Hathaway could have seen that as an opportunity to pare back, lock in some gains, and raise capital.

However, considering the age of this position and the pure number of stock sales this quarter, I don’t think it’s unreasonable to assume that Biogen was simply part of a larger plan to reduce overall equity exposure and raise capital. It’s a liquidity story.

This isn’t necessarily something that retail investors can glean much from, as Biogen is a high-quality company trading at an attractive valuation.

Rather, we can simply continue to take away that Berkshire Hathaway and Buffett are very cautious right now.

Davita Inc. (DVA) – Sold 470,000 shares. 

This sale dropped Berkshire Hathaway’s stake down to 38,095,570 shares, 1.2% lower than last quarter.

Davita Inc. is a healthcare company that provides kidney dialysis services through a large network outpatient centers.

So we have to ask ourselves if Berkshire Hathaway would be selling these shares in Davita Inc. if the pandemic had never come to pass. I think the answer is very likely a no.

Again, I think this rather tiny sale is part of a larger theme and plan for Berkshire Hathaway’s overall equity exposure and liquidity.

Thus, I don’t think there’s much to say here, other than the fact that Davita Inc.’s stock has held up remarkably well throughout the health crisis. It’s slightly up YTD, and I think that speaks to the quality of the firm and the necessity of their services for a certain percentage of the population (regardless of a pandemic).

General Motors Company (GM) – Sold 319,000 shares. 

Berkshire Hathaway reduced their stake by 0.4%, now down to 74,681,000 shares.

General Motors Company is a multinational company that designs, manufactures, markets, and distributes vehicles and vehicle parts, and sells financial services.

This position has mystified me much in the same way the airlines did. The automotive business, while more “investable” than it used to be, is still such a tough industry. Competition is brutal. Fixed costs are high. And it’s extremely cyclical. If you’re looking for reliable and rising profit, the auto industry will almost certainly disappoint you.

This sale was actually quite minor for Berkshire Hathaway. But it wouldn’t surprise me at all to see Berkshire Hathaway reduce that stake further from here. I don’t think the auto industry will struggle in the same way the airline industry will, if only because of the social distancing impacts for air travel, but I do think it’s a long road ahead in terms of a recovery.

Personally, I’m attracted to high-quality dividend growth stocks. I like solid fundamentals and rising cash dividends. GM is just not that kind of stock.

However, if you’re into a turnaround play, this stock might be right up your alley. It’s down around 40% YTD and deeply into value territory.

I have no doubts that pent-up demand will play into GM’s favor to a degree, but there are severe challenges in this industry that will not be solved overnight.

Goldman Sachs Group Inc. (GS) – Sold 10,084,571 shares. 

Berkshire Hathaway reduced their stake by 84%. The position is now at 1,920,180 shares.

Goldman Sachs Group Inc. is a global investment banking institution.

Again, I think this is another sale that’s more about portfolio positioning than a specific call on a particular business (Goldman Sachs, in this case).

There’s nothing wrong with Goldman Sachs Group. It’s a healthy business. And the stock looks a lot better around ~$180 than it did at the ~$235 when 2020 began.

If you’re a long-term investor, cheaper is always better. Sure, a lot of businesses will see some kind of lasting harm. And values almost across the board will be reduced somewhat as a consequence. But Goldman Sachs Group has approximately 344 million shares outstanding, which means the value of the company has dropped by more than $22 billion on the open market. It’s hard to argue that Goldman Sachs Group is permanently worth $22 billion less now than it was less than six months ago.

The stock is trading hands for less than 10 times earnings. And the stock yields almost 3%.

If this were 2007 again, it’d be one thing. But this is not a bank-led financial crisis. It’s a global natural disaster and health crisis that’s getting banks caught up in the storm.

I do think banks are on the more aggressive end of the risk spectrum, as I noted earlier. They’re going to have losses. Goldman Sachs Group isn’t a retail bank, but they’re still exposed to the financial system to a very large degree.

But if you’re a long-term investor that bets on life eventually returning to some kind of normal, I don’t see this stock as a sell.

Berkshire Hathaway arguably came into 2020 with way too much exposure to financials. It seems they’re rectifying that with a rejiggering of the portfolio, simultaneously improving liquidity in the process. With the size of this sale in particular, I wouldn’t be surprised to see Berkshire Hathaway completely sell out of this position next quarter.

JPMorgan Chase & Co. (JPM) – Sold 1,800,499 shares. 

This sale dropped Berkshire Hathaway’s stake to 57,714,433 shares, which is a reduction of 3.0%.

JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company. By assets, it’s the largest bank in the United States.

Most of what I just noted about Goldman Sachs Group can be repeated about JPMorgan & Chase, with the caveat that this is a retail bank. The other caveat is that this sale was much smaller for Berkshire Hathaway’s portfolio than the Goldman Sachs Group sale.

Speaking to this bank specifically, JPMorgan & Chase has set aside massive reserves in preparation of pandemic-related losses. And with aggressive testing by the Federal Reserve since the financial crisis, banks came into this pandemic positioned very strong. Plus, their CEO, Jamie Dimon, is recognized as one of the best leaders in corporate America.

I like this stock around $90. I like it very much. And I see myself adding while Buffett is selling.

That said, I don’t blame Buffett for backing away from some of the holdings in the financials. Berkshire Hathaway got aggressive here, with massive exposure to major financial institutions.

Low interest rates that are probably here to stay will only squeeze these firms more than they’ve been squeezed. Add in the uncertainty of a pandemic, and I can see why Buffett would like to reduce some of Berkshire Hathaway’s exposure to the banks.

(Indeed, we already know that Berkshire Hathaway also reduced its stakes in Bank of New York Mellon Corp. (BK) and U.S. Bancorp (USB) in the second quarter.)

But if you don’t already have your portfolio tilted so heavily toward financials, JPMorgan & Chase, with its P/E ratio of 10 and 4% yield, looks like an appealing long-term investment.

Just keep in mind that the stock, as well as the market as a whole, will likely be volatile for quite some time to come. This is unlikely to be a quick recovery.

And I’d also be very weary about putting too much of my capital to work today. I’d much prefer to dollar-cost average my way in and keep my eyes on improvements in the health and economic fronts. We might be here awhile.

Liberty Media Sirius XM C Shares (LSXMK) – Sold 240,000 shares.

This sale reduced Berkshire Hathaway’s stake by 0.7%, now down to 30,850,985 shares.

Liberty Media Corporation owns a range of media, communications, and entertainment businesses.

If you go back through Berkshire Hathaway’s quarterly transactions over the last decade, you’ll notice frequent buying and selling of various subsidiaries under the Liberty Global umbrella. I never was able to make much sense of it.

The only thing I can really say is that Buffett has made it a habit of trading around some of John Malone’s assets for whatever reason, and he’s never made a public statement about that (to my knowledge).

This goes for the remainder of the trades relating to Liberty Global you see above.

Suncor Energy Inc. (SU) – Sold 70,000 shares. 

This sale brought Berkshire Hathaway’s stake down to 14,949,031 shares, which is a reduction of 0.5%.

Suncor Energy Inc. is a Canadian integrated energy company with a particular focus on Canadian oil sands.

This is a quick turnaround by Berkshire Hathaway standards. They loaded up on Suncor as recently as Q4 2019, picking up over 4 million shares in that quarter. Now they’ve modestly reduced that.

I wouldn’t be surprised to see Berkshire sell more, even though oil demand and prices (as well as Suncor’s stock) have fallen off a cliff.

Suncor is in the unenviable position of being a high-cost producer, with their focus on the Canadian oil sands being a bit of a disadvantage. That disadvantage was made even more apparent when the firm had to cut their dividend just a couple weeks ago.

Equity in a major oil company like Suncor is essentially a bet on the long-term price of oil. Buffett has been explicit about that, which I agree with.

While I think integrated oil companies are still fine intermediate bets (over the next 10-20 years or so), society will continue to move in the direction of cleaner and more renewable sources of energy. It’d be silly for an advanced society to still rely on a finite and dwindling energy source to power everything.

The world still needs hydrocarbons. And the low valuations and high yields in the oil patch are appealing. But I’d be careful about going too heavy here, even after stock prices have dropped so precipitously.

Synchrony Financial (SYF) – Sold 675,000 shares.

Berkshire Hathaway now owns 20,128,000 shares, down by 3.2%.

Synchrony Financial is a consumer financial services company offering a range of banking and financing products.

Again, this is in the same vein as what we see with the sales of stock in Goldman Sachs Group and JPMorgan & Chase. Buffett spent some of Q1 2020 clearly lightening up on exposure to financials. I do think that’s wise, as they arguably had way too much exposure in the first place. Unwinding some of those holdings strikes me as prudent.

However, you and I are not in a position of having billions of dollars at risk in financials.

Since that’s the case, I think many of these stocks have been beaten up to the point of making them pretty attractive long-term bets.

This stock is down more than 50% YTD. You have to ask yourself if you think the business is permanently worth 50% less than it was at the start of the year. If you don’t think that’s the case, then now might be a “blood in the streets” type of moment for some of these financial firms.

The P/E ratio on this stock is around 4. That’s incredibly low. While I do expect a severe near-term compression in earnings, this looks like a very cheap stock if you’re going to assume that we’re back to some kind of normal in 2021 or 2022.

Teva Pharmaceutical Industries Ltd. (TEVA) – Sold 460,000 shares. 

Berkshire Hathaway reduced their stake by 1.1%, with the position now at 42,789,295 shares.

Teva Pharmaceutical Industries Ltd. is a pharmaceutical company that specializes primarily in generic drugs.

This investment honestly never made sense to me. I’ve been critical of it since the start.

Teva Pharmaceutial has been prolific at losing money since FY 2017. And they have a ton of debt on the balance sheet. It’s just never fit as the type of investment you’d see Berkshire Hathaway get into.

Based on the type and size of investment, it’s my feeling that it’s either Todd or Ted behind this move (as well as the position itself).

Nonetheless, with both guys having the full blessing of Buffett, I’ve been surprised to see Berkshire Hathaway commit any capital at all to Teva Pharmaceutical.

They initiated their position in Q4 2017. The stock has been basically treading water in a volatile way ever since.

This sale was pretty minor, but I wouldn’t be shocked to see them pare this stake further in coming quarters.

Companies with a lot of debt are in a precarious position right now, and Teva Pharmaceutical’s ~$24 billion in long-term debt (against a market cap of less than $13 billion!) is putting a major question mark on this business.

Verisign, Inc. (VRSN) – Sold 137,132 shares. 

Berkshire Hathaway reduced their stake down to 12,815,613 shares, which is 1.1% lower than last quarter.

Verisign, Inc. operates an array of network infrastructure, including two of the Internet’s thirteen root nameservers.

This is another position that seems less a statement about a particular company and more a statement about overall portfolio positioning and liquidity.

Verisign is a phenomenal business. The company has more than doubled its revenue over the last decade, and they routinely operate with net margin over 40%.

Meanwhile, the stock has been stellar over the last five years – up more than threefold over that period.

The stock doesn’t look cheap at all right now, although it never does. It’s the kind of high-quality, high-flying stock that looks perpetually expensive.

But if you don’t mind paying up, and you don’t care about the fact that it doesn’t pay a growing dividend, this looks like a long-term winner.

Axalta Coating Systems Ltd. (AXTA) – Sold 194,000 shares. 

This pared Berkshire Hathaway’s position by 0.8%, now down to 24,070,000 shares.

Axalta Coating Systems Ltd. is a coatings company that develops and manufactures coatings for light and commercial vehicles, industrial, and refinish applications.

Berkshire Hathway entered 2020 with over 24 million shares of Axalta Coating Systems. A sale of less than 200,00 shares amounts to a drop in the ocean.

There’s almost nothing to say about this transaction.

Again, I see this quarter as one big story of raising capital and maximizing liquidity due to unprecedented uncertainty.

That’s where Buffett’s mindset appears to be right now. He was explicit in this year’s annual meeting that he’s focused on making sure that Berkshire Hathaway remains a healthy and ongoing concern, no matter what comes their way. The last thing Buffett would want to see is his life’s work starting to crumble.

A combination of Buffett’s advanced age, Berkshire Hathaway’s significant insurance exposure, and the overall size of Berkshire Hathaway means a pivot to liquidity makes a lot of sense for them.

That said, if an outright business becomes available at a very attractive price, I could easily see Buffett writing a large check for one last “elephant”. Something in the range of $30 billion to $50 billion would be perfect for Berkshire Hathaway, allowing them to keep a significant reserve on the side for Buffett’s successors and Berkshire Hathaway’s insurance obligations.

-Jason Fieber

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