Why Is Buffett Avoiding Small-Bank Investments?

For example, the $16 billion-asset Valley National had a market cap of $2.2 billion at June 11. A 24% stake in the Wayne, N.J., company would equal about $526 million.

Berkshire's range of small bank investments is potentially widened by the addition of two investment managers, Todd Combs and Ted Weschler. Each has made investments of less than $500 million per investment, Kass says.

That could allow for smaller bank investments. For instance, the $4.9 billion-asset Independent Bank (INDB) in Rockland, Mass., had a $571 million market cap at June 11. If Berkshire were to invest in Independent without surpassing a 24.9% stake, the investment would total $137 million.

That's too small for Buffett, but maybe not Combs or Weschler, says Meyer Shields, an analyst at Stifel Nicolaus who follows Berkshire. "It could be interesting is if the newly hired folks have had exposure to banks," he says.

Berkshire's foray into community newspapers also shows that Buffett may be willing to break his own rule for investing in smaller businesses, Kass says. Berkshire agreed to buy Media General (MEG) for $142 million. "The $500 million threshold is not set in stone anywhere," he says.