At least one billionaire investor says he’d be buying shares in airlines right now. This happened only days after Warren Buffett had announced that Berkshire Hathaway has sold all of its airline stocks.
Perhaps unbelievably, the billionaire also sees an opportunity in tourism and hotels and says oil will head much higher.
Naguib Sawaris, chairman and CEO of Orascom Investment Holding and the only non-North Korean to hold a telecom license in North Korea, said during a recent appearance on CNBC that he sees plenty of opportunities right now.
“With every crisis there is opportunity,” Sawiris said. “You can go and buy an airline today for $1 if you are assuming the bulk of the debt.”
Most US-based airline stocks are down 50% this year, and air travel has plunged more than 95%. This took place as the coronavirus pandemic has brought the travel and tourism industry to a grinding halt.
Hope exists that as the country starts reopening and eases restrictions, the travel and tourism industry can start to recover.
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Sawaris says that President Trump’s decision to reopen the country is “one of the few times” he has been right. He also said that there is too much uncertainty around the possibility of a potential cure for the country to remain locked down.
“They might not find the cure, they might not find the vaccine, so how long are we going to be in prison in our homes?”
$100 Oil in 18 Months
Sawaris says that the recent price war between Saudi Arabia and Russia was a “calculated” move not against each other. However, he also believes this move serves as a coordinated effort to cripple the shale industry here in the United States.
He also believes that even if the OPEC+ nations, which includes both Saudi Arabia and Russia, had reached an agreement in March to cut production, both countries knew that oil prices were still going to fall as demand plunged across the globe due to the coronavirus. He said a deal in March would have meant lower oil prices. However, he pointed out that “it would have not fallen to this level.”
There are expectations that prices were going to continue falling. With this, both countries ramped up production when the existing agreement ended on April 1. There’s no other reason for this than to try and drive American shale companies out of business.
“I think it was calculated,” he said. “I think they knew that this was going to happen and they still wanted to do it because, by killing a competitor, the price will rise beyond 50 or 60 dollars.”
Sawaris went on to say that he expects oil prices to head much higher.
“I actually believe that 18 months from now oil will hit $100,” he said.
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However, as John Browne, former CEO of British Petroleum points out, oil prices could stay low for a lot longer.
“The prices will be very low and I think they will remain low and very volatile for some considerable time,” Browne told the BBC in a recent interview.
“This is very reminiscent of a time in the mid-1980s when exactly the same situation happened – too much supply, too little demand and prices of oil stayed low for 17 years.”
Editor’s Note: What’s your take? Will oil prices push towards $100/barrel in the next 18 months? Or is cheap oil here to stay? Leave us your thoughts below.