Warren Buffett’s Berkshire Hathaway is betting big on banks.
The billionaire’s company piled more than $13 billion into those stocks in third quarter, making Berkshire a major shareholder in four of the five largest U.S. banks, according to a regulatory filing Wednesday.
Berkshire disclosed a new stake in JPMorgan Chase and increased bets on Bank of America and Goldman Sachs Group.
Buffett, 88, has long been one of the most influential bank investors and has been diversifying his bets in the industry. He’s already near a regulatory cap with a 10% stake in Wells Fargo and is now also the biggest shareholder in Bank of America, U.S. Bancorp and the Bank of New York Mellon.
A strong U.S. economy, rising interest rates and corporate tax cuts have propelled profits at the nation’s biggest lenders to record levels. Still, October’s market declines meant the early returns on Berkshire’s latest bets aren’t the best — shares of six of its eight largest bank holdings are down so far in the fourth quarter.
Berkshire also disclosed new investments in PNC Financial Services Group and Travelers meaning three of the conglomerate’s four new investments were financial firms, with Oracle being the exception.
Shares of all four companies rallied in late trading Wednesday.
The billionaire investor has been struggling to find large acquisitions to put a more-than $100 billion pile of cash to work. In the third quarter, that meant more money flowed to stocks, including buying back Berkshire’s own shares. His net purchases of stocks in the period was the most he’s spent on that in more than four years.
Many of Berkshire’s bets on the largest banks — a Goldman Sachs Group holding and even his Bank of America stake — stem from investments he made during times of stress. In 2011, Buffett agreed to invest $5 billion into Bank of America for preferred stock and received warrants to buy common stock. Last year, he converted those warrants into a $16.5 billion common stock holding in Bank of America. With additional purchases, Berkshire’s stake climbed to $26 billion at the end of the third quarter.
The newly disclosed stake in JPMorgan deepens the ties between the two companies. Todd Combs, one of Buffett’s top deputies, is already on the bank’s board, and Berkshire has teamed up with JPMorgan and Amazon for a health care venture. It’s unclear whether the stake was initiated by Buffett or his investing deputies, Combs and Ted Weschler. But Buffett said in 2012 that he had a personal investment in the bank run by Jamie Dimon.
The Travelers stake represents a rare bet on an insurer that competes with Berkshire’s own Geico unit. That holding was valued at $459 million at the end of the third quarter.
Berkshire’s biggest holding, Apple is a relatively new one that has swiftly climbed to the highest spot in its more-than $207 billion stock portfolio.
Two years ago, Buffett’s company disclosed that it was piling into the iPhone maker after years of typically avoiding investments in technology companies. Now, Berkshire has a stake of 252 million shares, worth about $57 billion at the end of the third quarter. The newfound interest in tech companies was also reflected in the $2.1 billion bet on Oracle.
