The Oracle of Omaha is still one of the greatest investors on the planet, and he’s still got the investment edge. Still, I believe 2020 was a one-off type of year for Buffett, not just because the pandemic hurt Berkshire Hathaway on the bottom-line, but because Warren Buffett hit the sell button with publicly-traded shares that were under the most stress.
Not only did the man ditch his airline stocks through the worst of the first wave of lockdowns, but he also sold out of a perfectly good fast-food behemoth that could emerge to become one of the best reopening plays on the TSX.
Why did Warren Buffett break hit the panic button in 2020?
He didn’t. As I mentioned in prior pieces, Berkshire was an aircraft-carrier-sized company that didn’t have the agility to pivot and avoid the damage that was to come as a result of the COVID-19 crisis. You see, Berkshire had many wholly-owned firms that felt the full impact of the pandemic. The best that Warren Buffett and company could have done was to offload some publicly-traded shares to better mitigate COVID-19 risks.
I don’t blame Buffett for ditching the airlines or Restaurant Brands, as both were sitting at ground zero of the crisis. I’m sure he knew that he’d be leaving a tonne of upside on the table once the pandemic inevitably came to an end.
With Bill Gates standing in Warren Buffett’s corner, though, it’s too early to conclude that Buffett had made a mistake by selling his airline shares. COVID-19 variants of concern could reverse the latest relief rally for the airline stocks. As for Restaurant Brands, though, I think the man made a mistake by eliminating his position, even though Berkshire’s QSR stake was relatively modest to begin with.
Restaurant Brands will rise again
You see, even if COVID-19 variants render the current slate of vaccines obsolete, Restaurant Brands still has a plan to rise out of its funk. As you may know, the firm behind Tim Hortons, Burger King, and Popeyes Louisiana Kitchen has fallen behind the times in recent years.
The company failed to make the most of its Tim Hortons’ brand, and the COVID-19 pandemic only acted as salt in the parent company’s wounds. Sadly, the pandemic has weighed most heavily on Tim Hortons, as quarantined Canadians skipped out on their daily double-doubles. Modernized drive-thru capacity would have helped the firm ease the pressures at the iconic Canadian chain, but nobody, not even Warren Buffett, would have predicted that the pandemic would strike from out of nowhere last year.
Playing catch-up: Better late than never!
Although Restaurant Brands has lagged its bigger brothers in the fast-food scene in terms of mobile and drive-thru tech, I do think the firm’s “modernization” initiatives will make QSR stock great again, even in the unfortunate scenario that sees us still in a pandemic through most of 2022. Restaurant Brands is modernizing around 10,000 drive-thrus across its banners to alleviate pandemic-induced sales pressures.
Management isn’t just going to wait for the pandemic to end. It’s taking action, and I do think it’ll rise out of this pandemic as strong as it’s ever been. That makes QSR stock a buy while it’s down and out, regardless of when you think the insidious coronavirus will be conquered.
I think Warren Buffett made a mistake by ditching QSR shares. Berkshire is already overweight cash and would have been far better off collecting QSR’s 3.5%-yielding dividend through and after this pandemic.
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Fool contributor Joey Frenette owns shares of Berkshire Hathaway (B shares) and RESTAURANT BRANDS INTERNATIONAL INC. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares), short March 2021 $225 calls on Berkshire Hathaway (B shares), and long January 2023 $200 calls on Berkshire Hathaway (B shares).