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Warren Buffett sells Bank of America shares. What other financial assets does he still own?
Warren Buffett sells Bank of America shares. What other financial assets does he still own?
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Whenever Warren Buffett’s Berkshire Hathaway (NYSE:BRK) (NYSE:BRK) makes a trade, the financial world pays close attention. Last week, SEC filings revealed that Berkshire Hathaway trimmed his position at Bank of America (NYSE:BAC), selling 33.9 million shares worth $1.48 billion. It still owns 999 million shares of Bank of America worth approximately $29.94 billion and remains one of its largest shareholders. Because of Berkshire Hathaway’s significant stake in Bank of America, it had to file a special notice with the Securities and Exchange Commission outside of its normal 13F filings.
Should investors take any cues from this? What other financial companies is Berkshire Hathaway still heavily invested in? Berkshire Hathaway sold Bank of America when it was near its 52-week high, and the sale could simply be profit-taking. However, it could also signal some concerns about Bank of America or financial companies in general.
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Berkshire Hathaway still invests in financial companies
Berkshire Hathaway’s investments are notoriously concentrated. The bulk of its outside investments are spread across five companies. As of last quarter’s report, 75% of its equity investment was spread across just five companies:
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American Express (NYSE:AXP) US$ 34.5 billion
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Apple (NASDAQ:AAPL) US$ 135.4 billion
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Bank of America (NYSE:BAC) US$ 39.2 billion
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The Coca-Cola Company (NYSE:KO) US$24.5 billion
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Chevron (NYSE:CVX) US$ 19.4 billion
Although best known for its credit card, debit card, and travel services, American Express operates as both a financial services corporation and a bank. This includes offering personal savings accounts, certificates of deposit (CDs), and other financial products through its online banking platform. In addition, the company offers business financing, payment solutions, and expense management services. As a bank holding company, it is subject to regulations governing banking institutions. Its total loans grew 15% in the second quarter of 2024.
Much of American Express’ recent growth has come from international business, which increased 13%. It raised its full-year guidance range to $13.30 to $13.80, up from $12.65 to $13.15 previously, and is targeting revenue growth of 9% to 11% for the year. On its most recent earnings call, Stephen Squeri said that while they may see some discretionary pullback, the U.S. consumer has been pretty consistent and he thinks that will continue to be the case for the rest of the year.
The story continues
Berkshire Hathaway tends to shift its financial holdings depending on what it sees in the market. In 2020, it sold shares of JPMorgan Chase (NYSE:JPM), PNC Financial Services (NYSE:PNC) and M&T Bank (NYSE:Mountain biking). When the collapse of Silicon Valley Bank rocked markets in 2023, Berkshire Hathaway cut its shares in U.S. Bancorp (NYSE:USB) and Bank of New York Mellon Corp (NYSE:BK). At that point, he added shares in Bank of America and initiated a stake in Capital One (NYSE:COF).
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In addition to financial stalwarts, Berkshire Hathaway has stakes in other financial companies. One of the most intriguing is Nu Holdings (NYSE:NAKED), a Latin American fintech company. Although Berkshire Hathaway’s stake in Nu Holdings is modest 0.26% of your total portfoliorepresents an interesting look at where finance may be headed. Nu Holdings surpassed the 100 million customer mark earlier this year and is now the fourth largest financial institution in Latin America.
It’s impossible to know why Berkshire Hathaway decided to reduce its position in Bank of America. It may see exposure to a weakening consumer market or other opportunities in the broader markets that it wants to exploit. Despite the relatively large sale, it doesn’t seem to signal any lack of faith in the financial services sector. We’ll have to wait until Berkshire Hathaway’s next 13F filing to get a look at the company’s latest smaller financial dealings.
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