Warren Buffett – usually regarded as one of the best investors of all time – hasn’t had a particularly good 2020.
Financially speaking, it’s been a difficult year for Buffett and his famous holding company Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B).
Not only has Berkshire not deployed a cent of its estimated US$137 billion cash pile (even on Berkshire stock buybacks), Buffett also sold Berkshire’s significant positions in 4 US airline companies at a hefty loss.
Adding to that, Berkshire shares have not recovered nearly as much as the broader US markets. For some context, since 23 March, the Dow Jones Industrial Average has risen by just under 35% – whilst Berkshire’s Class A shares have only recovered ~12.6%. The Berkshire Class B shares have fared even more poorly, banking only 11.23%.
According to the Australian Financial Review (AFR), Warren Buffett owns around 16% of Berkshire Hathaway, which means that his net worth has plunged around US$20 billion in 2020 to roughly US$69 billion.
The AFR also noted that Buffett is now worth considerably less than Facebook founder Mark Zuckerberg, whose 13% ownership of Facebook puts him at a net worth of US$86.5 billion.
Should Buffett fans be worried?
Not in my opinion. This is a man who has proved he knows how to take advantage of the share market over a very long period of time to build massive wealth.
In the past, such as during the dot-com bubble of the early 2000s, Buffett’s investing style has been out of favour for periods of time. Some new investors have dismissed him as ‘too old’ or ‘out of touch with technology’. Whilst it’s true Buffett hasn’t invested in some of the biggest US growth companies over the past decade, he has still generated meaningful returns for his shareholders at the same time as amassing one of the largest war chests on the market.
If I were a shareholder in Berkshire Hathaway, I would feel very comfortable knowing Buffett has over US$130 billion ready to go in these uncertain times.
Yes, Warren Buffett’s net worth (on paper) has fallen in 2020, but that doesn’t mean he’s a spent force or a ‘has been’. On the contrary, I think he’s one of the best investors to watch right now, and when he finally starts putting that US$137 billion to work, it’s a good hint to take!
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.