Warren Buffett is a big fan of bank stocks — to the tune of $100 billion
Warren Buffett’s Berkshire Hathaway Inc. holds nearly $100 billion in financial-services stocks, underscoring the size of the billionaire investor’s ongoing bet on the future of the U.S. economy.
Berkshire’s position has built up over years and includes banks, payment companies, insurers and a ratings firm. Taken together, these holdings represent about one-fifth of Berkshire’s $481 billion market capitalization. By comparison, at the end of 2010, investments in these kinds of companies accounted for 12% of Berkshire’s market capitalization.
Banks are often viewed as a proxy for the wider economy. Berkshire BRK.B, -1.49% also benefits from banks’ rising dividends, adding to the cash that Buffett can spend on new deals and investments. However, declining interest rates and fears of an economic slowdown have weighed on bank stocks this month. The Dow Jones Industrial Average DJIA, -3.05% on Wednesday fell 800 points, or 3%, its biggest one-day decline this year. Bank stocks underperformed the market as weak economic data weighed on Treasury yields. The KBW Bank Index fell 3.9%.
As of June 30, six of Berkshire’s top 10 stockholdings were financial companies: Bank of America Corp. BAC, -4.69% , Wells Fargo & Co. WFC, -4.33% , American Express Co., U.S. Bancorp USB, -3.65% , JPMorgan Chase & Co. JPM, -4.15% and Moody’s Corp. MCO, -3.27% Berkshire is the biggest shareholder in all but JPMorgan.
An expanded version of this report appears on WSJ.com.
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