When the UK surprised pundits, pollsters and prediction markets by voting to leave the European Union on June 23, 2016, financial markets around the world plunged over the next two trading sessions, including 5 percent declines in the S&P 500 and the Dow Jones Industrial Average.With many investors selling shares as the outlook for the economies of the UK, Europe and the rest of the world darkened, how would Warren Buffett and his portfolio managers at Berkshire Hathaway respond?

Buffett gave a clue when telling CNBC prior to the vote how he’d react to Britons voting to leave the EU: “It won’t make any difference to what Berkshire does,” he said. “It wouldn’t change one iota what I’m doing in businesses or stocks.”

Fast forward to this week, with Money magazine reporting that “losses in Berkshire Hathaway’s equity holdings could reach nearly $7 billion, which on a portfolio of $128 billion as of March 31, works out to a loss of about 5.4 percent. That’s actually slightly better than the S&P 500 over the same period. What’s more, Berkshire Hathaway’s losses are only on paper, unless he actually sells his holdings, which he rarely does.”

Clinical Professor of Finance David Kass at the University of Maryland’s Robert H. Smith School of Business, gives more insight: “With over $60 billion of cash on Berkshire’s balance sheet, it is likely they invested some of these funds in individual stocks they had been following, which would have become more attractive after this sudden decline.”

Kass says Warren Buffett and his portfolio managers have very long time horizons of at least 10 years and view short-term external shocks to the financial markets as buying opportunities. “With the S&P 500 (dividends included) compounding at approximately 10 percent annually over decades, and the outlook for long-term growth continuing to be very bright, Berkshire would have viewed this short-term decline as an unexpected buying opportunity.

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