Market Extra: Here’s Warren Buffett’s chance to offer coronavirus-shaken investors his insights on a topsy-turvy stock market

Market Extra

Berkshire will holding its annual shareholder meeting online Saturday

Warren Buffett


AFP/Getty Images

If Warren Buffett has any words of comfort or warning for stock-market investors dazed and confused by the COVID-19 pandemic, they will presumably hear them on Saturday.

“Warren Buffett’s silence has been deafening these past tumultuous two months,” said Julian Emanuel, chief equity and derivatives strategist at BTIG, in a Thursday note.

As a result of the COVID-19 pandemic, the Berkshire Hathaway Inc.
BRK.A,
-2.74%

BRK.B,
-2.50%

chairman and chief executive will be holding the conglomerate’s annual shareholder meeting online Saturday, fielding questions from shareholders reviewed by a trio of handpicked journalists at 4:45 p.m. Eastern. The event will be live-streamed on Yahoo Finance.

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The virtual event marks a temporary halt to an investor tradition. The throngs of Berkshire Hathaway shareholders and other Buffett fans who usually crowd the streets, shops and restaurants of Omaha during what’s been dubbed “Woodstock for Capitalists” will be missing — much to the pain of the city’s merchants. The cancellation will deprive Omaha of an estimated $21.3 million in spending, according to The Wall Street Journal.

And there will be no pearls of wisdom from blunt-spoken Berkshire Vice Chairman Charlie Munger, 96, who won’t be making the trip from California.

Much has been made of the contrast between Buffett’s low investing profile now versus the 2008 financial crisis, when Berkshire made a number of headline-grabbing investments, including multibillion-dollar deals with Goldman Sachs Group Inc.
GS,
-3.44%

and General Electric Co.
GE,
-4.41%

and the outright purchase of Burlington Northern Santa Fe.

Berkshire released its quarterly earnings report on Saturday morning, showing the conglomerate’s holdings of cash and equivalents ballooned to a record $137.2 billion at the end of the first quarter, up from about $128 billion at year-end. The company reported a nearly $50 billion loss because of a huge drop in the paper value of its investments.

Other than trimming his holdings in airline stocks, there’s been very little discussion of what, if anything, Buffett plans to do with Berkshire Hathaway’s cash pile, Emanuel said. “Could the silence be because at 21.6 times consensus 2020 earnings and without clarity as to how the economy is likely to reopen, stocks are expensive to the Oracle of Omaha?,” Emanuel wondered.

Berkshire Class A shares were down around 19% year to date to trade near $275,000 as of Friday afternoon, and were off around 15.6% over the past 12 months. The S&P 500
SPX,
-2.80%

is down around 12% for the year to date and around 3.2% over the past year. Stocks have been on a roller-coaster ride, with the S&P 500 diving nearly 34% from a record close on Feb. 19 through March 23, before putting in a sharp April bounce.

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Emanuel also wondered, given Buffett’s aversion to debt, if he’s “thinking about problems down the road given the borrowing binge that both the U.S. government and corporate America have been on since March 1?”

Meanwhile, Munger, in an interview with The Wall Street Journal earlier this month, said that unlike 2008-09, when desperate executives were beating down Berkshire’s door, businesses are paralyzed by the lockdowns.

“Everybody’s just frozen,” he said. “And the phone is not ringing off the hook.”

While Munger won’t participate in this year’s abbreviated event, Berkshire investors will get a long look at Greg Abel, a 57-year-old Berkshire vice chairman long seen as a top contender to succeed Buffett, who will turn 90 in August. Abel will be joining Buffett in the virtual event. Ajit Jain, 68, another vice chairman also seen as a potential successor, isn’t scheduled to participate.

Barron’s:Who will replace Warren Buffett? Berkshire Hathaway’s annual meeting may provide a clue

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