Warren Buffett’s Berkshire Hathaway has increased its holding of financial services stocks to roughly $100 billion, about one-fifth of its total market capitalization. This according to an article inThe Wall Street Journal.
“Berkshire’s position has built up over years and includes banks, payment companies, insurers and a ratings firm,” the article reports, with total holdings increasing from its 2010 level of 12% of market capitalization. It adds, “banks are often viewed as a proxy for the wider economy. Berkshire also benefits from banks’ rising dividends, adding to the cash that Mr. Buffett can spend on new deals and investments.”
The article cites comments Buffett made in February that financial companies are “very good investments at sensible prices, based on my thinking. And they’re cheaper than other businesses that are also good businesses, by some margin.” Buffett noted that banks benefited from the 2018 revisions to U.S. tax law and that notwithstanding a low interest-rate environment, some larger banks continue to deliver healthy returns.
As of June 30th, the article reports, six of Berkshire’s top holdings in financials included Bank of America Corp. Wells Fargo & Col, American Express Co., U.S. Bancorp, JPMorgan Chase & Co. and Moody’s Corp. (it added that Berkshire is the largest shareholder in all but JPMorgan Chase).