Warren Buffett has been waiting years for stocks to look more attractive. He apparently didn’t think the first-quarter plunge was that opportunity.
The famed investor’s Berkshire Hathaway Inc. spent the quarter building its massive cash pile to a record US$137 billion as the coronavirus slowdown started to grip the U.S. That was up almost US$10 billion from the end of 2019, while Buffett spent just a net US$3.5 billion buying shares of his and other companies.
Buffett, who will host Berkshire’s annual meeting virtually later Saturday, has largely stayed in the shadows as the pandemic hammered the global economy and stock markets. That’s a contrast to the financial crisis in 2008, when his Omaha-based company dipped into its vast cash reserves to gain lucrative preferred shares and rescue businesses teetering on the edge of collapse. While Berkshire’s operating earnings climbed in the first quarter, Buffett warned of pain from the virus’s fallout.
“As efforts to contain the spread of the COVID-19 pandemic accelerated in the second half of March and continued through April, most of our businesses were negatively affected, with the effects to date ranging from relatively minor to severe,” the company said in a regulatory filing Saturday.
Berkshire’s Class A shares have dropped about 19 per cent this year through Friday’s close, worse than the 12-per-cent decline in the S&P 500 over the same time period.
Berkshire bought US$1.8 billion of stocks on a net basis in the period, and repurchased just US$1.7 billion of its own stock, less than it did in the last three months of 2019. The company recently disclosed that it pared back stakes in Delta Air Lines Inc. and Southwest Airlines Co. as airlines have been pummeled by travel restrictions and stay-at-home orders worldwide.
Buffett, Berkshire’s chairman and chief executive officer, has been on the hunt for higher-returning investments such as acquisitions or stock purchases for years, but has struggled amid what he called “sky-high” prices. That has prompted a range of questions about whether he can continue the market-beating run that turned Berkshire into one of the world’s most valuable companies.
The conglomerate’s first-quarter net income plunged to a loss of US$49.7 billion, driven by US$55.5 billion in unrealized losses in the massive stock portfolio. Gains in the insurance unit’s investing portfolio helped push operating earnings up almost six per cent to US$5.87 billion.
Berkshire started to see the the COVID-19 pandemic affect units including its railroad, BNSF, which reported a 5.2-per-cent decrease in volume in the first quarter. Precision Castparts reported lower sales across all of its major markets, partially because of the pandemic and Boeing Co.’s 737 Max issues.
Buffett will host the annual meeting starting at 3:45 p.m. in Omaha with key deputy Greg Abel by his side. Buffett’s longtime business partner, Charlie Munger, won’t be in attendance. Follow the TopLive blog here.
North American equity markets rally in spite of widespread unrest – BNNBloomberg.ca
1:15 p.m. ET: North American equity markets extend gains into midday, oil rallies
North American equity markets were solidly in positive territory through the midday trade, with the S&P/TSX Composite Index up 0.9 per cent, the Dow Jones Industrial Average gaining 0.8 per cent, the S&P 500 rising 0.4 per cent and the Nasdaq Composite modestly higher, up 0.1 per cent.
U.S. benchmark oil West Texas Intermediate accelerated higher into the afternoon, rising more than three per cent to US$36.55 per barrel to trade at session highs.
That helped lift the TSX energy sector, which led the way on the composite with a 3.4-per-cent gain on the session.
The Canadian dollar continued to move higher against its U.S. counterpart, gaining a third of a cent to trade at 74.04 cents U.S., though the greenback has been broadly weaker against almost all of its major-market peers.
9:35 a.m. ET: North American equity markets rally in spite of widespread unrest
North American markets notched gains into the early trading day Tuesday, with the S&P/TSX Composite Index and Dow Jones Industrial Average both up half a per cent, the S&P 500 gaining a third of a per cent and the Nasdaq Composite Index up a more modest 0.1 per cent. The gains came in spite of widespread civil unrest in the United States, as some police responded with force to demonstrators protesting against systemic racial inequities.
In Toronto, shares of BlackBerry Ltd. rose about seven per cent to extend Monday’s gains after an unconfirmed report from StreetInsider said the company has held talks with Fairfax Financial over a deal for Fairfax to acquire the remainder of BlackBerry’s shares. In an email to BNN Bloomberg, BlackBerry declined to comment on rumours or speculation.
Crude oil prices were higher, with U.S. benchmark West Texas Intermediate up half a per cent to US$35.0 per barrel, though it had briefly breached the US$36 level earlier in the day. Crude has gotten a boost from the OPEC+ group’s production curtailments, and there are reports the group may extend those cuts for another month to support prices.
Alberta’s Western Canadian Select also gained, rising 1.55 per cent to US$29.51 per barrel.
The Canadian dollar extended Monday’s surge against its U.S. counterpart, gaining another two-tenths of a cent to 73.90 cents U.S.
All Addition Elle and Thyme Maternity stores in Canada to close down – CBC.ca
Reitmans will shutter 77 Addition Elle and 54 Thyme Maternity stores across Canada as part of its restucturing process, the Montreal-based retailer announced Tuesday.
Last month, the 94-year-old fashion chain announced that it would restructure its operations partly because of COVID-19, which hammered retailers hard.
In addition to its eponymous chain focusing on work clothes for career-aged women, Reitmans also runs the Addition Elle, Thyme Maternity, RW & Co. and Penningtons chains.
As past of the restructuring process, Reitmans has decided to permanently close Addition Elle and Thyme Maternity. The former focuses on plus size fashions. The latter on maternity wear.
The move will result in the loss of about 1,400 jobs — 1,100 in store and about 300 at head office.
“The strategic decision to close two beloved Canadian fashion brands was not made lightly, but it is necessary to enable our business to move forward as a profitable organization,” CEO Stephen Reitman said.
“All of the efforts we put forth to turn these brands around were derailed by the COVID-19 pandemic and, unfortunately, we can no longer afford the required resources to bring them back to profitability.”
Locations of both chains are set to reopen in the coming days, subject to physical distancing restrictions across the country, but the two retail chains will be in wind-down mode, liquidating as much inventory as possible to pay back creditors.
The last day for Thyme Maternity will be July 18.
The last day for Addition Elle will come the next month, on August 15.
Company wide, before the restructuring process began Reitmans had 576 stores across Canada, including 259 Reitmans, 106 Penningtons and 80 RW & CO. locations. Many stores for the surviving three brand names will also close, as the company plans to put more focus into selling online.
Bell selects Ericsson, not Huawei, to build 5G cellular network – CBC.ca
BCE Inc. has decided to partner with Swedish telecommunications equipment maker Ericsson to build its 5G network in Canada.
The Montreal-based telecom firm said in a press release Tuesday that it will use Ericsson equipment to build its next generation cellular network, known as 5G.
Ericsson is already a component supplier for Bell’s existing networks, including 4G, but 5G will allow the network to handle far more quantities of data, faster.
“Bell’s 5G strategy supports our goal to advance how Canadians connect with each other and the world, and Ericsson’s innovative 5G network products and experience on the global stage will be key to our rollout of this game-changing mobile technology across Canada,” BCE president Mirko Bibic said, citing Ericsson’s existing role in 92 other 5G cellular networks around the world.
The decision means BCE will not be using 5G equipment from Huawei, a Chinese equipment maker that is currently installed on existing networks around the world, including Bell’s. But many countries around the world say Huawei’s close relationship with the Chinese government could expose cellular networks to spying.
The United States and Australia have forbidden telecom firms in those countries from working with Huawei to develop their 5G networks.
The Canadian government is currently mulling whether to allow Huawei to work on Canadian 5G networks, as part of a comprehensive governmental review of cybersecurity protocols.
BCE rival Rogers also announced in 2018 that it would work with Ericsson on its 5G network. Telus, meanwhile, announced this past February that it would use Huawei equipment in its 5G network.
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