Tags: Buffett | bank | stocks | financial

CNBC: Why Buffett Likes Bank Stocks

By    |   Thursday, 25 September 2014 02:25 PM

Bank stocks represent four of Berkshire Hathaway's biggest 11 holdings, adding up to a $50 billion stake.

That's about one-seventh of Berkshire Hathaway's market valuation and equals the market cap of Deutsche Bank or PNC Financial, according to CNBC contributor Tim Mullaney.

"I don't think it's remarked enough what a huge position that has become," David Rolfe, chief investment officer of investment firm Wedgewood Partners, a Berkshire shareholder, tells CNBC.

"He [Berkshire CEO Warren Buffett] likely has the biggest stake in bank stocks of any U.S. investor other than a large mutual fund company."

And what explains his love affair with banks?

First, Buffett likes companies in industries that other companies need in order to do business, Mullaney notes.

Bank stocks also afford Buffett one of his cherished opportunities —"to be greedy when others are fearful." And he has been able to snap up bank shares on the cheap during financial crises, Mullaney explains.

Berkshire's biggest bank holdings are Wells Fargo, American Express, US Bancorp, Goldman Sachs and Bank of New York Mellon.

While Buffett has succeeded with his investments in almost every sector he's entered, retail constitutes an exception. Buffett has called his performance in that area "awful," "pretty bad" and "really bad," The Wall Street Journal reports.

To be sure, it's not significant, given that Berkshire's nine retail businesses make up only 2 percent of its $182 billion in revenue, according to the paper's calculations. Those businesses include See's Candies, Ben Bridge Jeweler and Nebraska Furniture Mart.

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Bank stocks represent four of Berkshire Hathaway's biggest 11 holdings, adding up to a $50 billion stake.
Buffett, bank, stocks, financial
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2014-25-25
Thursday, 25 September 2014 02:25 PM
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