Warren Buffett's Berkshire Hathaway (BRK.B, $303.20) cut its stake in longtime holding U.S. Bancorp (USB, $44.87) by more than half.
Buffett, who serves as Berkshire Hathaway's chairman and CEO, has been slashing his holding company's exposure to financial stocks – and bank stocks in particular – for years. And although the U.S. Bancorp position hasn't been immune to some recent downsizing in the Berkshire Hathaway equity portfolio, Buffett has left it mostly intact.
That is, until now.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Berkshire Hathaway sold 56% of its position in the nation's fifth largest bank by assets, a new regulatory filing revealed. Buffett's conglomerate now holds 52.5 million USB shares, or 3.5% of the regional lender's shares outstanding. That's down from an ownership stake of 8.1% prior to the sales.
Berkshire Hathaway's USB stock was worth $2.4 billion as of Thursday's close, and now accounts for just 0.7% of the Berkshire Hathaway equity portfolio. That's down from 1.8% before Buffett slashed the stake.
Berkshire, formerly the bank's largest shareholder, now drops to fourth place behind asset management giants Vanguard, BlackRock and State Street Global Advisors.
Buffett First Bought USB in 2006
Not to get sentimental or anything, but U.S. Bancorp is one of the oldest holdings in the Berkshire Hathaway portfolio. Warren Buffett first bought shares in the nation's largest regional lender in the first quarter of 2006. And while he has always been tight-lipped about the USB position, Buffett's actions over the past few quarters have hinted that something like this might be in the offing.
After all, Buffett clipped Berkshire Hathaway's USB stake by 5%, or 6.6 million shares, in the second quarter of 2022. He also pared the stake in each of the first three quarters of 2021.
True, Buffett had been gradually reducing Berkshire Hathaway's exposure to USB. But those scissorings stood in stark contrast to what he's done with so many of Berkshire's other bank stocks.
Mostly, he's taken a hatchet to them.
In just a sample of moves, Berkshire Hathaway dumped what was left of its stake in Wells Fargo (WFC) in the first quarter of 2022, and exited positions in JPMorgan Chase (JPM), Goldman Sachs (GS), PNC Financial Services (PNC) and Travelers (TRV) over the past couple of years.
To be sure, Warren Buffett is by no means done with big bank stocks. Bank of America (BAC) is Berkshire Hathaway's second largest holding after Apple (AAPL). The nation's second largest bank by assets accounts for 10.2% of Berkshire's total portfolio value.
Berkshire Hathaway also owns 55.2 million shares in Citigroup (C), a position that Warren Buffett initiated in the first quarter of 2022. At 0.8% of the portfolio, Citigroup is one of Berkshire Hathaway's 15 largest investments.
Other financial sector stocks in the Berkshire Hathaway equity portfolio include American Express (AXP), Bank of New York Mellon (BK), Mastercard (MA), Visa (V) and Ally Financial (ALLY), among others.
What This All Means
The bottom line is that U.S. Bancorp stock is a long-time market laggard, and so perhaps we shouldn't be too surprised that Warren Buffett decided it was time to dramatically lighten up on the position. We'll learn more of what the world's greatest long-term investor has been up to when Berkshire Hathaway reports its third-quarter buys and sells on Monday, Nov. 14.
For now, all we can say for certain is that Berkshire Hathaway stock has been a market-beating buy this year. Operating earnings expanded 20% in the third quarter, helping to bolster BRK.B's case as one of the best stocks to buy for a bear market.
It's also fair to assume that this isn't good news for USB stock. If Warren Buffett's recent history with big banks stocks offers any sort of guide, Berkshire Hathaway might be putting even more USB shares on the market soon.
-
The Original Property Tax Hack: Avoiding The ‘Window Tax’Property Taxes Here’s how homeowners can challenge their home assessment and potentially reduce their property taxes — with a little lesson from history.
-
Is Mint Mobile's Home Internet a Game-Changer or Just Another Option?Mint Mobile recently unveiled its new home internet service. We break down how it works so you can determine if it's a great value for your needs.
-
With Buffett Retiring, Should You Invest in a Berkshire Copycat?Warren Buffett will step down at the end of this year. Should you explore one of a handful of Berkshire Hathaway clones or copycat funds?
-
Stocks at New Highs as Shutdown Drags On: Stock Market TodayThe Nasdaq Composite, S&P 500 and Dow Jones Industrial Average all notched new record closes Thursday as tech stocks gained.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
The Best Bank Stocks to BuyBank stocks are part of the financial services sector and are a way to gain exposure to the broader economy. Here, we look at how you can find the best ones.
-
Stocks Slide to Start September: Stock Market TodaySeasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
9 Warren Buffett Quotes for Investors to Live ByWarren Buffett transformed Berkshire Hathaway from a struggling textile firm to a sprawling conglomerate and investment vehicle. Here's how he did it.
-
A Timeline of Warren Buffett's Life and Berkshire HathawayBuffett was the face of Berkshire Hathaway for 60 years. Here's a timeline of how he built the sprawling holding company and its outperforming equity portfolio.
-
Berkshire Buys the Dip on UnitedHealth Group Stock. Should You?Buffett & Co. picked up UnitedHealth stock on the cheap, with the embattled blue chip one of the newest holdings in the Berkshire Hathaway equity portfolio.
