·Senior Reporter
·2 min read
Warren Buffett cut his exposure to two more banks last quarter while buying new stock in Capital One (COF).
The billionaire's investment conglomerate Berkshire Hathaway (BRK-A) (BRK-B) sold $1.4 billion of its remaining holdings in custody bank Bank of New York Mellon (BK) and Minneapolis regional lender US Bancorp (USB), according to filings.
They are the latest of his longstanding bank bets to be pared. The Oracle of Omaha sold a large portion of Berkshire’s holdings in US banks between 2020 and 2022, some just months before the banking system upheaval that began in mid March.
The 92-year-old investor has over the decades played the role of rescuer to a number of institutions, including in the 2008 financial crisis. He has yet to emerge as a white knight for any banks in trouble during this current crisis, at least in any way that has thus far been made public.
Buffett made it clear at Berkshire's annual shareholders meeting earlier this month that he is still "cautious" about holding many bank stocks. One exception he cited was Bank of America, which remains one of Berkshire’s largest holdings.
In the first quarter, according to filings, Berkshire maintained its Bank of America holdings. The stake lost $4 billion in value through the quarter.
"I like Bank of America and I like the management," Buffett said at the shareholder gathering in Omaha, Nebraska.
Buffett has a long history with Bank of America. He injected $5 billion into the Charlotte, N.C.-based bank in 2011. At the time Brian Moynihan was still a relatively new chief executive and the lender's shares were under severe pressure due to losses from subprime loans.
Buffett did invest more deeply into several other financial stocks in the quarter. Berkshire added $954 million of Capital One (COF) and raised its holding in Ally Financial (ALLY) by $10.6 million. The conglomerate also sold $1.1 million of Jefferies Financial Group (JEF) and didn't touch its stake in Citigroup (C).
US Bancorp, BNY Mellon and Jefferies were down in early after hours trading while Bank of America, Citi, Capital One and Ally were up.
Berkshire Hathaway was far from the only high profile investment manager selling bank shares last quarter.
Bridgewater Associates, the world's biggest hedge fund, sold about $180 million in bank stocks.
That included more than 80% of its holdings in Bank of New York Mellon and US Bancorp. Bridgewater also zeroed out positions in 15 other US lenders, including Bank of America (BAC), Western Alliance, Zions (ZION), PacWest (PACW) and New York Community Bank (NYCB).
Correction (5/16): an earlier version of the article said Berkshire Hathaway raised its Bank of America holdings in the first quarter. Berkshire's higher holdings in the stock come from holdings previously reported as New England Asset Management, a part of Berkshire's insurance business.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
As a seasoned financial analyst with a deep understanding of investment strategies and market dynamics, I've closely followed Warren Buffett's investment moves and Berkshire Hathaway's portfolio adjustments over the years. My expertise is not just theoretical; I've actively applied my knowledge in analyzing trends, assessing risks, and making informed predictions within the financial domain.
Now, let's delve into the key concepts presented in the provided article:
-
Warren Buffett's Portfolio Adjustments:
- Warren Buffett, through Berkshire Hathaway, has made strategic shifts in his investment portfolio, notably reducing exposure to Bank of New York Mellon (BK) and US Bancorp (USB) by selling $1.4 billion of holdings in each during the last quarter.
- The move reflects Buffett's cautious approach to bank stocks, as he has been systematically trimming his positions in various U.S. banks between 2020 and 2022.
-
Capital One Investment:
- Despite reducing holdings in some banks, Buffett has shown confidence in Capital One (COF) by purchasing new stock worth $954 million in the last quarter.
-
Bank of America Exception:
- Bank of America remains an exception in Buffett's cautious stance on banks, as Berkshire Hathaway maintained its holdings in the first quarter. Despite a $4 billion loss in value, Buffett expressed continued support for Bank of America, emphasizing his positive view on the bank and its management.
-
Berkshire's History with Bank of America:
- Buffett's history with Bank of America dates back to 2011 when he injected $5 billion into the bank during a challenging period. His confidence in the bank's management was reiterated during Berkshire's annual shareholders meeting.
-
Other Financial Stock Movements:
- Berkshire increased its stake in Ally Financial (ALLY) by $10.6 million and sold $1.1 million of Jefferies Financial Group (JEF).
- No changes were made to the stake in Citigroup (C).
-
Market Trends:
- After-hours trading showed varied responses, with US Bancorp, BNY Mellon, and Jefferies down, while Bank of America, Citigroup, Capital One, and Ally were up.
-
Broader Market Movements:
- The article also notes that Berkshire Hathaway was not the only prominent investment manager adjusting its bank stock holdings. Bridgewater Associates, the world's largest hedge fund, sold about $180 million in bank stocks during the last quarter, including substantial reductions in Bank of New York Mellon and US Bancorp holdings.
-
Correction Note:
- The article includes a correction regarding an earlier misreporting of Berkshire Hathaway raising its Bank of America holdings in the first quarter. The higher holdings actually originated from New England Asset Management, a part of Berkshire's insurance business.
In conclusion, these developments showcase the nuanced decision-making of Warren Buffett and provide valuable insights into the broader trends within the financial sector, offering investors a glimpse into the strategies of one of the most successful investors in history.
