It's Still Early, But Smaller Investors May Best Buffett With Airline ETF

It may not be a competition in the purest sense and the score isn't anywhere close to being settled, but ordinary investors appear to be on their way to proving Warren Buffett wrong with airlines stocks with many using the U.S. Global Jets ETF JETS as their vehicle of choice.

What Happened

As was widely reported early this month, Buffett said his Berkshire Hathaway (NYSE: BRK-A) dumped stakes in each of the four largest domestic carriers, which are also JETS' top four holdings, in the first quarter.

JETS slumped on May 4, the first trading day following that news. In fact, the Buffett Effect seemed to be in effect as the lone airline exchange-traded stumbled through May 14. Since then, JETS is higher by more than 21%.

Again, this “competition” is still in its early innings, but Bloomberg Senior ETF Analyst Eric Balchunas has a great comparison. He likens the the JETS crowd to a 16-seed in the NCAA Tournament leading a No. 1 seed (Buffett) early in the first half.

$JETS up 11.8% today, its second best day EVER. It's now up 27% in past week-ish and 8% since Buffett said he was selling. Long ways to go tho. Equiv of Middle Tenn State leading Duke 18-10 in first half. https://t.co/e5y4NTDErb

— Eric Balchunas (@EricBalchunas) May 26, 2020

See Also: 'I Was Wrong': Warren Buffett's Berkshire Hathaway Sold $6B Of Airline Stock In April

Why It's Important

Data confirm it is in fact the retailer investors winning with JETS. As ETF Store President Nate Geraci notes, JETS is popular with Robinhood users.

Believe it or not, some of those investors really got this thing right, buying JETS around the March lows. Interestingly, Robinhood users' affinity for JETS continued as the ETF revisited those lows in April and again earlier this month. In fact, Buffett's departure from airline stocks didn't encourage JETS investors to follow suit.

Month-to-date, investors added $182.14 million to JETS, a healthy percentage of the fund's nearly $753 million in assets under management. A payoff arrived yesterday as JETS jumped 11.75% on more than double the average daily volume.

What's Next

History doesn't always repeat, but it's hard to ignore the airline industry's track record (with help from Uncle Sam) of rebounding from crises, including oil shocks, the 9/11 terrorist attacks and the global financial crisis. Plus, some data points indicate travelers aren't letting the coronavirus pandemic deter them from flying.

“There’s already evidence that a recovery in bookings is underway. The Transportation Security Administration (TSA) reported a big jump in the number of daily commercial air passengers last week (last week of April),” according to U.S. Global Investors, JETS' issuer.

“From April 29 to 30, the number of people the agency screened in the U.S. rose by 35,000, or 30 percent, to 154,695 people. That’s still 2.3 million below where we were a year earlier, but I see the increase as an encouraging sign that we’re well past the bottom.”