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Warren Buffett’s Berkshire Hathaway has some of the US’s biggest banks’ interests in the last three months of 2024 as billionaire investors dumped billions of dollars worth of Bank of America and Citigroup shares. has been significantly reduced.
The vast conglomerate sold about three-quarters of its Citigroup position and sold 40.6 million shares over $2.4 billion, according to a filing with the U.S. Securities Regulatory Authority issued Friday.
Berkshire also continued to sell shares in Bofa, an investment that dates back to the financial crisis when Buffett stepped in to provide ballast to one of the nation’s biggest lenders.
Berkshire, who owns 13% of the bank’s stake and longtime largest shareholder, has been waiting for Bofa and the wider US financial system to survive the regional banking crisis. However, since July last year, they have begun to actively cut stocks, and sometimes dumped stocks in the open market during consecutive trading sessions.
Friday’s disclosure showed Berkshire had cut another 95 million shares since mid-October, when it fell below the 10% reporting threshold from mid-October. Sales in the following weeks reduced Berkshire’s BOFA stake to around 8.9%.
The Omaha-based group sold 1.7 million shares of credit card specialists, cutting their position at Capital One, fifth and fifth largest.
Buffett was pruning Berkshire’s mammoth stock portfolio for most of 2024. That included an investment in one of his most profitable transactions, Apple.
Friday’s filing shows Buffett and his two investment agents have found little valued bets in the US stock market that prefers yields on the US financial bill that has strengthened Berkshire’s profitability. .
The company invested in one new stock in the fourth quarter, buying $1.2 billion worth of shares in the Modelovilmer Constellation brand.
However, it was unclear whether the investment in the constellations was made by Buffett or by his two investment agents. Analysts and investors typically view investments of less than $1 billion as bets made by Todd Combs or Ted Weschler, two men who manage a portion of the company’s $272 billion stock portfolio.
Buffett’s withdrawal from bank stocks will be partially lifted by President Donald Trump’s promise to reduce industry restrictions as many investors grow more optimistically in the sector than they had before.
Stocks in the country’s largest banks averaged around 40% last year, as measured by the KBW Bank Index.
Buffett first placed a big bet with Bofa in 2011 with an unsolicited $5 billion investment. This was nursing a big loss from a pair of wise acquisitions.
The investment was a huge vote of trust for Brian Moynihan, the newly named BOFA chief executive of the time. “There were a lot of financial cowboys in the banking industry,” Buffett said in 2022. Moynihan was, in his view, one of the good guys.
However, when the Federal Reserve began to actively lift interest rates in 2022 and 2023, BOFA’s decision to invest in the longer-dated Treasury Department while the pandemic backfired, was inversely Its revenues were strengthened during the period.
This investment left BOFA with hundreds of billions of dollars of low-now securities, many of which will not mature until after 2026. Bofa’s returns have recently been unable to redeploy its cash into high-yield investments.
For City, Berkshire’s $3 billion stock purchase in 2022 has not generated the same positive topic as BOFA.
City Chief Jane Fraser announced a major restructuring in late 2023 after delaying longtime rivals. Earlier last year, Fraser told the bank’s chief executive that Buffett had expressed his enthusiasm for her plans.
Citi has made some progress in 2024 by cutting costs, with operating expenses down 4% compared to the previous year.
Banks’ return on tangible common equity (profitability metric) was 7% in 2024, up from 4.9% in 2023, but lower than the main peer. City had targeted 11-12% by the end of 2026, but reduced that range to 10-11% in January.
