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May 5, 2020, 2:55 p.m. EDT

Warren Buffett just made this group of traders almost $200 million

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By Shawn Langlois, MarketWatch


MarketWatch photo illustration/Getty Images, iStockphoto

Warren Buffett told shareholders Saturday that Berkshire Hathaway /zigman2/quotes/208872451/composite BRK.A +1.90% unloaded all of its positions in the airline sector. “I was wrong about that business,” he admitted.

For one group of investors, him being wrong had to feel so right.

According to S3 Partners, short-sellers made $188 million in mark-to-market profits in Monday’s session as airline stocks, led by United /zigman2/quotes/205037281/composite UAL +8.29%  , American /zigman2/quotes/209207041/composite AAL +6.80% , Delta /zigman2/quotes/200327741/composite DAL +5.61% and Southwest /zigman2/quotes/201071949/composite LUV +5.23%  , took a hit after Buffett’s announcement.

Here’s how it broke down by company:

And there could be more to come, according to S3 Partners managing director Ihor Dusaniwsky,

“We should see continued short selling in AAL, UAL and DAL and a resumption of short selling in LUV after Buffett’s comments and today’s price action,” he wrote in a blog post on Monday . “Shorts, who are already deep in the money, should be letting their profits run as long as the airline stock prices trend downward. But if prices start to rebound, we can expect a quick rush to cover some of their short exposure in order to realize their mark-to-market profits.”

Even before Buffett’s move, shorting the airline industry this year has paid off in a big way, with the entire sector delivering $4.13 billion in net-of-financing mark-to-market profits. That’s almost a double since the beginning of 2020, S3 Partners data shows.

On Tuesday, airline stocks were under pressure yet again, sitting out a rally in the broader market that lifted the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.44% more than 300 points higher. The S&P 500 /zigman2/quotes/210599714/realtime SPX +1.05% and Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.66% were also firmly in the green.

/zigman2/quotes/208872451/composite
US : U.S.: NYSE
$ 273,900
+5,120 +1.90%
Volume: 329.00
July 10, 2020 4:00p
P/E Ratio
45.78
Dividend Yield
N/A
Market Cap
$444.14 billion
Rev. per Employee
$637,113
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/zigman2/quotes/205037281/composite
US : U.S.: Nasdaq
$ 32.67
+2.50 +8.29%
Volume: 80.48M
July 10, 2020 4:00p
P/E Ratio
8.86
Dividend Yield
N/A
Market Cap
$9.49 billion
Rev. per Employee
$448,946
loading...
/zigman2/quotes/209207041/composite
US : U.S.: Nasdaq
$ 11.94
+0.76 +6.80%
Volume: 90.45M
July 10, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$6.07 billion
Rev. per Employee
$345,547
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/zigman2/quotes/200327741/composite
US : U.S.: NYSE
$ 27.09
+1.44 +5.61%
Volume: 31.35M
July 10, 2020 4:00p
P/E Ratio
5.03
Dividend Yield
0.00%
Market Cap
$17.28 billion
Rev. per Employee
$499,337
loading...
/zigman2/quotes/201071949/composite
US : U.S.: NYSE
$ 33.22
+1.65 +5.23%
Volume: 14.94M
July 10, 2020 4:00p
P/E Ratio
9.79
Dividend Yield
0.00%
Market Cap
$19.58 billion
Rev. per Employee
$373,554
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,075.30
+369.21 +1.44%
Volume: 337.36M
July 10, 2020 5:09p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,185.04
+32.99 +1.05%
Volume: 2.41B
July 10, 2020 5:09p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
10,617.44
+69.69 +0.66%
Volume: 3.19M
July 10, 2020 5:16p
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Shawn Langlois is an editor and writer for MarketWatch in Los Angeles. Follow him on Twitter @slangwise.

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