قالب وردپرس درنا توس
Home / Business / Warren Buffett now puts $ 29 billion on this bank stock – that's the reason

Warren Buffett now puts $ 29 billion on this bank stock – that's the reason



<p class = "Canvas Atomic Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "There are a few bank stocks in the portfolio Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) and most were selected by Warren Buffett himself In the first quarter, Berkshire owned shares of 10 different banks, and these positions have a current market value in excess of $ 91 billion. "data-reactid =" 11 "> In the portfolio of Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK- B) are some bank stocks and most have been selected by Warren Buffett himself. By the end of the first quarter, Berkshire had shares in 1
0 different banks, and these positions had a current market value in excess of $ 91 billion.

<p class = "canvas-atom canvas-text Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "However, we have just learned that Buffett and his team has bolstered the company's largest bank equity investment, Bank of America (NYSE: BAC) . Bank of America's recent stock purchase in Berkshire is pushing the stakes even over the 10 percent ownership threshold data-reactid = "12"> However, we have just learned that Buffett and his team have scaled up the company's largest bank equity investment, Bank of America (NYSE: BAC) Berkshire's recent stock purchase exceeds the 10% ownership threshold, so here's why it's such a big deal.

Warren Buffett l groans with a crowd behind him.

Source: The Motley Fool.

Berkshire's last purchase of Bank of America and why it matters so much.

In a recent SEC filing, Bank of America announced that Berkshire Hathaway owns 950 million shares of Bank of America Bank. This is significantly more than the approximately 896.2 million shares it had at the end of the first quarter.

At the current stock price, the additional 53.8 million shares acquired by Berkshire equal $ 1.64 billion, which was invested in the company's largest-ever bank equity investment. Berkshire's stake in Bank of America is worth $ 29 billion, still far behind technology giant Apple (19459002), Berkshire's largest investment, with a market value of $ 51.7 billion, but a solid second place ahead of Coca -Cola (19459002). an investment of $ 21.2 billion.

That's why it's so important. Berkshire Hathaway now owns 10.4% of the bank's outstanding shares through a combination of increased Berkshire investment and aggressive share repurchases by Bank of America.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "The ownership quota of 10% is particular In the past, Buffett has actively avoided owning more than 10% of most of his bank shares – even if he sells significant amounts of Wells Fargo shares to stay below that threshold. Without delving too deeply into the implications of owning more than 10% of a bank, Buffett's willingness to deal with additional regulatory issues in order to own a larger piece of Bank of America shows extreme confidence in the stock. "data-reactid =" 29 "> The ownership ratio of 10% is particularly important for banks. In the past, Buffett has actively avoided owning more than 10% of most of its bank shares – and has even sold substantial amounts of Wells Fargo shares to stay below that threshold. Without paying too much attention to the impact of more than 10% ownership of a bank, Buffett's willingness to handle additional regulatory issues in order to own a larger piece of Bank of America shows extreme faith in the stock.

Why is Buffett possibly so confident about Bank of America?

A look at Bank of America's latest results shows why Buffett may be particularly eager to invest. For one, Bank of America is growing better than the other major banks.

Bank of America's loan portfolio and deposit base grew by 4% and 6% year-on-year in the second quarter of 2019, respectively. The second highest credit growth among the "big four" US banks was only 2%.

In addition, Bank of America has made an outstanding contribution to increasing efficiency and further increasing its profitability. The Bank's return on equity (ROE) of 11.6% and return on investment (ROA) of 1.23% would have been ridiculous just a few years ago.

From the point of view of a value investor, Bank of America seems to be a bargain. With only 1.15 times the book value and 10.8 times the 12-month mark, Bank of America performs well and continues to improve, but the improvements did not affect the stock price.

Does Buffett buy other bank shares? as well as?

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To be clear, the only reason why we know about Berkshire's recent investment in Bank of America lies in exceeding the ownership threshold of 10%, and in recent quarters Berkshire has increased some of its bank equity investments, including JPMorgan Chase and Goldman Sachs just to name a few. "Data-reactid =" 36 "> To put it bluntly, the only reason we know about Berkshire's recent investment in Bank of America is the 10% ownership overrun. In recent quarters, Berkshire has increased some of its bank equity investments, including JPMorgan Chase and Goldman Sachs just to name a few.

Since Berkshire When Berkshire's next 13-F registration is available in mid-August, it is quite possible that we will find that Bank of America is not the only one that owns a 10 percent Holdings in these and several other bank investments hold bank stocks Warren Buffett has recently bought.

<p class = "Canvas Atom Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "Text" Content = " More From The Motley Fool "data-reactid =" 42 "> More From The Motley Fool

<p class =" Canvas Atom Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Matthew Frankel, CFP, owns shares of Apple, Bank of America and Berkshire Hathaway (B-shares) .The Motley Fool owns shares of and recommends Apple and Berkshire Hath ( B shares) The Motley Fool has the following options: short January 2021 200 USD for Berkshire Hathaway (B-shares), long January 2021 200 USD for Berkshire Hathaway (B-shares), short January 2020 155 USD for Apple, long January 2020 $ 150 for Apple, $ 155 for Apple's short phone calls in January 2020 and $ 150 long calls for Apple in January 2020. The Motley Fool has a disclosure policy. "data-reactid =" 50 "> 19 459039] Matthew Frankel, CFP, owns shares in Apple, Bank of America and Berkshire Hathaway (B-Shares). The Motley Fool owns shares and recommends Apple and Berkshire Hathaway (B-shares). The Motley Fool has the following options: Short January 2021 200 USD settles on Berkshire Hathaway (B shares), Long January 2021 200 USD on Berkshire Hathaway ( B-Shares), Short January 2020 $ 155 on Apple, Long January 2020 Apple calls worth $ 150, short January 2020 Apple calls worth $ 155 and long January 2020 calls to Apple worth $ 150.


Source link