It’s been a very bad day for Warren Buffett

Turbulence at Delta and Apple hit Berkshire Hathaway investments

Warren Buffett, chairman and CEO of Berkshire Hathaway.

Warren Buffett, chairman and CEO of Berkshire Hathaway.

 

If there’s any solace for downcast investors right now, it’s that even famed investor Warren Buffett is having a bad start to 2019. Sharp drops in Apple and airline stocks alone on Thursday wiped more than $4 billion (€3.52 billion) from the value of his stakes in these companies.

Apple shares fell 9.5 per cent to $142.92 after the company cut its revenue forecast for the first time in 16 years, blaming poor iPhone sales in China.

Berkshire Hathaway, Mr Buffett’s investment vehicle, is Apple’s third-largest shareholder with about 258 million shares, according to Bloomberg data, and the tumble in shares of the iPhone maker has lowered the value of that stake by about $3.9 billion overnight, Financial Times calculations showed.

Mr Buffett had typically shied away from investments in the tech sector until 2011, when he made a big bet on IBM. However, last year, Mr Buffett exited the investment in the US technology company, instead giving Apple his vote of confidence.

The blow to Berkshire’s portfolio on Thursday was compounded by a sharp drop in airline stocks after US carrier Delta lowered its forecast for unit revenue growth in the December quarter.

Delta, which counts Berkshire as its largest shareholder, warned that it expects fourth-quarter unit revenue to rise about 3 per cent, down from its previous forecast of about 3.5 per cent, citing slower-than-expected ticket price increases.

Shares in the carrier tumbled 8.3 per cent to $46.04. That trimmed the value of Berkshire’s roughly 65.5 million shares in Delta by about $270m.

The downbeat outlook dragged rivals lower as well, with Southwest shares down about 3 per cent, United shares off about 5 per cent and American Airlines shares off about 7.5 per cent.

Mr Buffett’s investment vehicle, which is the second-largest shareholder in each of these airline companies, saw the value of its stakes in Southwest, United and American slip by $80 million, $109 million and $106 million, respectively. – Copyright The Financial Times Limited 2019