- What's going on y'all?
Welcome back to Channel Wealth Hacker Labs.
I'm your gracious host, Jeff Rose.
And the man, the myth, the legend, Mr. Warren Buffet,
he's at it again.
That's right folks.
So I've already reported that last week
that he sold off huge stakes in Delta Airlines
and also Southwest.
And the biggest fear in seeing The Oracle of Omaha
dump a large stake in two positions that he used to love
is that is Warren giving up on this market rally?
Does he still feel that a crash is coming
and he's just trying to exit as much of his holdings
that he can?
And the reason being is because Warren just unloaded
$30 million of another stock.
This time, it's the Bank of New York,
which he had over a 10% withholding in.
And according to Business Insider,
so we can see here that he sold off $30 million
of BNY Mellon stock this week, over 860,000 shares.
And since he had over a 10% stake in the company
through his conglomerate, Berkshire Hathaway,
he had to file this with the SEC,
which you can actually find online here.
So you can see on April the 7th,
he sold off 197,000 shares.
Just the weirdest thing, 197,000 (laughs) shares
at $35 a share.
Sold off another stake of 634,000 on April the 8th,
and another smaller block of 37,000.
All for about $35 per share, 35.50 give or take,
give or take some change there.
So that, it's alarming because if you actually look
at the stock,
yeah we are at about $51 at the beginning of the year.
It dropped down to 27 and then after this rally
that we've had here recently, he sold it at $35.
Looks like he coulda got two more dollars a share
if he would've waited a few more days.
But, the big concern is, wait a second,
if this bank was trading at a high of 51
earlier in the year, even about 45ish,
then why was he willing to exit so quickly?
Was it just the fact that we had a market rally
and it's a short-lived rally based on his gut,
based on his research, based on his analysis or expertise,
and he just wanted to get as much as he could right now?
That is one concern, and actually this is reported by CCN,
which I don't know, I will say when I read this publication,
they definitely kinda go towards
the doom and gloom kinda side,
and that's kinda what the case it was making here.
Just looking at the stock, looking at its current trends,
and just looking at, man, why the timing of the sale
is really the big question.
Is it that?
He just felt like, "Man, this is a short-lived rally.
"It's gonna continue to go down, so I'm just gonna go ahead
"and exit while I can."
Now, the Business Insider article,
it gives more, I don't know if I'd say a reasonable
or just more of a simpler solution,
but just by trimming the stake he had in the company
from 10.4% down to 9.8,
it just reduces the regulatory burden that comes
with holding that stake of 10% more.
So, anytime you've owned more than 10% of any company,
you gotta file this with the SEC,
and that's what he had to do with Delta
and also with Southwest.
So is that why the reasoning here?
Either way, it is interesting, the timing of things.
There are many people that are fearful
that this is a short-lived rally.
They're calling this the V-bounce.
We're just, is this a V?
Are we just hitting and it's gonna spring back up
or are we going, are we just gonna go back down
and this is all just a bunch of hoopla?
There's still a lot of fear out there, right?
I mean, the U.S. just became the largest casualties
with the whole coronavirus thing,
and that number obviously is only going to get worse.
I'm expecting us to be quarantined in our house
at least for another month.
I was actually just talking to a friend
who's over in Italy right now
and they just got the announcement that they're quarantined
I think until another five weeks starting I think yesterday
or last week.
So, they're ahead of us and they're still going to be
quarantined, even though I think there's been some sign
that the whole social distancing and what they've done
over there is helping,
but nonetheless, they aren't ready to open everything up.
And the U.S. economy, if we're quarantined
for another five weeks, which I think is a very safe bet,
the $1200 stimulus check that you received,
that's not gonna go very far.
We've got so many small businesses struggling.
Corporate earnings are only gonna continue to be worse
and I think the question is,
is that already written into the stock prices
that you see now?
Some analysts say yes.
I'm trying not to be a pessimist here,
but I just don't feel that that's the case.
And whether it's written in,
that doesn't take away investor sentiment.
Where are people's moods?
And people are irrational, we all are, we're humans,
and I just think more uncertainty
is just gonna cause more chaos in the market.
So maybe that is more why Warren wanted to get out.
The only person that really knows is Warren
and he has not released any of that information yet,
so I guess when he does we'll find out.
Until now, just let it be known that Warren just sold off
another huge stake in a longtime holding.
Obviously, he made some money with it,
so just wondering what he did that for.
All right y'all, just wanted to give you light
of that situation,
what's going on in the markets and the world.
This is Jeff Rose reminding you that it's your money,
it's your life, and only you can make it awesome.
Until next time, peace.