If You Invested $1,000 In Airline Stocks When Buffett Sold, Here's How Much You'd Have Now

Wall Street legend and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett took some investors by surprise in April 2020 when he sold Berkshire’s entire stakes in Delta Air Lines, Inc. DAL, American Airlines Group Inc AAL, United Airlines Holdings Inc UAL and Southwest Airlines Co LUV near their lowest points of the COVID-19 market sell-off.

Buffett famously said investors should be “fearful when others are greedy” and “greedy only when others are fearful.” Nearly two years after Buffett dumped his airline stocks, investors that were greedy when Buffett himself was fearful have been rewarded by the market.

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Buffett Reverses Course: At Berkshire’s annual shareholder meeting in May 2020, Buffett said he had been wrong to invest roughly $4 billion in airline stocks to begin with.

"I just decided that I'd made a mistake...in investing in the airlines business," Buffett said. "It's a very difficult business. The future is much less clear to me how the business will turn out."

Airlines and other travel stocks experienced a near worst-case scenario when the COVID-19 breakout occurred in early 2020. Travel demand fell to nearly zero during the worst of the pandemic, causing airlines to rack up massive amounts of debt during the travel shutdowns. On March 27, 2020, airlines received $25 billion in federal bailouts, and got another $15 billion in government funding in December.

Ultimately, airline stocks were a leading recovery play in the second half of 2020 and into 2021 as investors anticipated the rollout of COVID-19 vaccines. The most recent data from Bank of America suggests TSA throughput is now down just 26% from 2019 levels, and a recent Morning Consult poll found 56% of current remote workers would be comfortable returning to the office, another positive sign for the travel industry.

Buying The Airline Dip: At this point, investors who bought major airline stocks the day Buffett announced his sale of the assets have done fairly well on the trade. Here's a look at how much $1,000 in each of the following airline stocks purchased on May 2, 2020 would be worth today, assuming reinvested dividends:

• Delta: $1,646
• American: $1,548
• United: $1,611
• Southwest: $1,531
• Spirit Airlines Incorporated SAVE: $1,630
• JetBlue Airways Corporation JBLU: $1,622

For the record, Buffett said last year he does not regret his decision to dump the airlines.

"I do not consider it a great moment in Berkshire’s history, but also we’ve got more net worth than any company in the United States," he said.

Benzinga's Take: Any investor who bought a basket of airline stocks when Buffett sold has generated some decent returns on those stocks up to this point, but there are at least two investments that have performed better since that time. Investors who put $1,000 in the SPDR S&P 500 ETF Trust SPY on May 2, 2020, would have $1,633 today, while investors who put $1,000 in Berkshire Hathaway stock on that date would have about $1,714 today.