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Warren Buffett sells stakes in two banks, buys into Capital One

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.

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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.

Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc's annual shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott Morgan
Berkshire Hathaway Chairman Warren Buffett at a 2019 shareholders meeting. REUTERS/Scott Morgan (Scott Morgan / Reuters)

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.

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