Berkshire Hathaway (BRK-B) chair Warren Buffett has historically not been a big fan of airline stocks. Buffett held a bearish view of the airline industry as early as 2013. However, over the last three years, Berkshire has taken stakes in airline stocks like Southwest Airlines (LUV), Delta Airlines (DAL), United Continental (UAL), and American Airlines (AAL).
Berkshire raised its stake in Delta Airlines in the first quarter. It bought some Delta Airlines stock in the fourth quarter as well and is now the company’s biggest shareholder. However, over the last two quarters, Berkshire has been gradually trimming its stake in Southwest Airlines. Incidentally, earlier this year, there were rumors that Berkshire might acquire Southwest Airlines. However, by selling some Southwest Airlines stock, Buffett seems to have silenced the rumor mill.
Stocks fell in May
United Continental, Delta Airlines, and Southwest Airlines fell 12.6%, 12.1%, and 12.2%, respectively. American Airlines was the worst performing airline stock in Berkshire’s portfolio and lost a fifth of its market capitalization last month. Notably, American Airlines stock hit a three-year low last month.
Delta Airlines and Southwest Airlines are marginally in the green year-to-date, while American Airlines and United Continental are in the red. Nonetheless, all four airline stocks in Berkshire Hathaway’s portfolio have underperformed the S&P 500 this year.
To be sure, Buffett’s outperformance versus the S&P 500 has narrowed this century. Read What Has Been Impacting Warren Buffett’s Performance? for more analysis.