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Portfolio > Economy & Markets > Stocks

Buffett Slashes Stake in Wells Fargo

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Warren Buffett’s Berkshire Hathaway has slashed its stake in Wells Fargo stock by more than 40% to 136 million shares as it continues to reduce its holdings financial stocks.

The sale, revealed in a filing with the Securities and Exchange Commission, follows the company’s 25% cut in its Wells Fargo position in the second quarter and leaves the famed investor’s company with a 3.3% stake in the bank.

Prior to these sales, Berkshire Hathaway was Wells Fargo’s largest shareholder and the bank was one of Berkshire’s largest positions.

Wells Fargo stock had lost almost 54% year to date through Friday and was down an additional 3% by midday Monday. In contrast, the Financial Sector SPDR ETF  which includes Wells Fargo and Berkshire Hathaway B shares, its leading holding  has lost 33% this year, and the KBW bank index has lost 34%.

In the second quarter, the San Francisco-based bank lost $2.4 billion, or -$0.66 per share, vs. profits of $6.2 billion, or $1.30 per share, a year ago and $653 million, or $0.01 per share, in the first quarter. It also set aside $9.57 billion in Q2 for potential loan losses, more the doubling the $3.83 billion it set aside in the prior quarter.

Wells Fargo is in the process of making job cuts, following its sale of hundreds of millions of dollars in assets earlier this year in order to meet the $1.95 trillion asset limit imposed on it by the Federal Reserve after its fake-accounts scandal, according to a Wall Street Journal report.

Other Berkshire Positions

Earlier this year, Buffett’s company sold shares of JPMorgan Chase and the remainder of its holdings in Goldman Sachs, though it added to its holdings of Bank of America. Berkshire’s stock is off just 3.6% year to date.

More recently, the company disclosed a huge bet on Japanese stocks. It purchased slightly more than 5% of the shares in five Japanese companies: Itochu, Marubeni, Mitsubishi, Mitsui & Co. and Sumitomo over roughly 12 months. The stakes are worth over $6 billion. 

In that SEC filing, Berkshire said it expects to maintain the investments for the long term and could boost its stakes to 9.9%. 

“I am delighted to have Berkshire Hathaway participate in the future of Japan,” Buffett said in a statement. “The five major trading companies have many joint ventures throughout the world and are likely to have more. … I hope that in the future there may be opportunities of mutual benefit.”

Berkshire Hathaway posted a net loss of $50 billion in the first quarter but made up for about half of that in the second quarter, supported by $5.1 billion in buybacks in May and June, the biggest share repurchase by the firm in a single quarter.

Related: Unlike Rivals, Wells Fargo Is Starting Job Cuts — Report 


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