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Warren Buffet is big on Banks

The American business magnate, investor, speaker and philanthropist Warren Edward Buffett who serves as the chairman and CEO of Berkshire Hathaway is still considered one of the most successful investors in the world and has a net worth of US$84.4 billion as of November 1, 2018, making him the third-wealthiest person in the world. Buffett was born in Omaha, Nebraska. He developed an interest in business and investing in his youth, eventually entering the Wharton School of the University of Pennsylvania in 1947 before transferring and graduating from the University of Nebraska at the age of 19. He went on to graduate from Columbia Business School, where he moulded his investment philosophy around the concept of value investing that was pioneered by Benjamin Graham. He attended New York Institute of Finance to focus his economics background and soon after began various business partnerships, including one with Graham. He created the Buffett Partnership after meeting Charlie Munger, and his firm eventually acquired a textile manufacturing firm called Berkshire Hathaway and assumed its name to create a diversified holding company.

He is famous for having a good eye for value. These days, he has been looking hard at big U.S. banks.
Berkshire Hathaway (ticker: BRK.A) bought more than $13 billion of bank stocks in the third quarter, highlighted by a new, $4 billion holding in JPMorgan Chase (JPM) and an almost $6 billion purchase of Bank of America (BAC), the first major open-market buy by Berkshire.

Buffett’s company now holds stakes in seven of the country’s top 10 banks: Wells Fargo (WFC), U.S. Bancorp (USB), Goldman Sachs Group (GS), PNC Financial Services Group (PNC), and Bank of New York Mellon (BK), as well as JPMorgan and Bank of America. ( Citigroup (C), Morgan Stanley (MS), and Capital One Financial (COF) are the ones he decided to leave out.

Earnings at large banks are expected to rise about 40% this year. With income rising and stock prices generally lower, bank valuations have contracted. With the seven big banks, a longstanding investment in American Express , and some smaller bank stakes, Berkshire’s financial-stock exposure is about $85 billion. That’s more than 40% of Berkshire’s total equity holdings of $200 billion—against a 14% weighting for the group in the S&P 500.

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