The effects of the coronavirus pandemic have finally landed at the doorstep of Warren Buffett’s Berkshire Hathaway. The multinational conglomerate plans to close some smaller businesses and is positioning itself conservatively as it deals with the outbreak, according to Berkshire’s vice chairman Charlie Munger.
“We’re like the captain of a ship when the worst typhoon that’s ever happened comes,” Munger said in an interview with The Wall Street Journal, adding, “Warren wants to keep Berkshire safe for people who have 90% of their net worth invested in it. That doesn’t mean we couldn’t do something pretty aggressive or seize some opportunity. But basically we will be fairly conservative. And we’ll emerge on the other side very strong.”
Berkshire did not immediately respond to a request for comment.
The Nebraska-based company boasts a market value of more than US$450 billion and has 90-plus businesses in insurance, energy, railroad, and retail, among other sectors. Its larger companies, such as GEICO, tend to operate in the black.
However, Munger said that Berkshire has “a few businesses, small ones, we won’t reopen” even as the global health crisis eases up, though he didn’t identify them. The vice chairman added that the phone hasn’t been “ringing off the hook” with corporate executives looking for capital, even though Berkshire ended 2019 with US$128 billion in cash. This is a marked change from the financial crisis in 2008 when Berkshire gave billions of dollars to General Electric and Goldman Sachs.
As to whether another Great Depression was possible, Munger responded, “Of course we’re having a recession.” But, he said that government efforts to limit the fallout would probably help avert a “long-lasting Great Depression.”
Berkshire is expected to release Q1 results around May 02 when it holds its annual meeting.
