- Citi shares purchased after 40% fall
- Stake represents approximately 2.8% of Citi shares
- Joins Bank of America, US Bancorp, Visa in portfolio
Warren Buffett is backing banks again after taking a near-$3 billion stake in embattled Citigroup (C:NYSE), latest Berkshire Hathaway (BRK.B:NYSE) regulatory filings show. Banking stocks had been a favourite of Buffett’s, but the sector has been mothballed this year as recession worries escalated.
His firm started unloading JPMorgan (JPM:NYSE) and Goldman Sachs (GS:NYSE) in 2020 and a regulatory filing on 16 May revealed it had exited Wells Fargo (WFC:NYSE).
The 91-year-old ‘Oracle of Omaha’ scooped up 55.2 million Citi shares after the banking stock underperformed the rest of the financial sector.
Citi shares had lost more than 21% this year, versus a 15% decline for the S&P 500, and over the past year, Citi had lost around 40% compared to the Financial Select Sector SPDR Fund’s (XLF: NYSEARCA) rough 9% fall.
WARMING TO FINANCIALS
The Citi stake represents roughly 2.8% of the bank’s outstanding shares, costing Berkshire around $53.40 per share on average.
Citi stock jumped 7.5% overnight following the Berkshire filing, and pre-market data shows the share price rising nearly 1% further when trading opens later today.
Citi joins a stable of financial assets in the Berkshire portfolio. It owned $41.6 billion of Bank of America (BAC:NYSE) at the end of March, marking its second biggest holding next to Apple (AAPL:NASDAQ).
Berkshire has owned Bank of American since 2017 after converting warrants which gave Berkshire the right to buy $5 billion of shares at $7.14 by 2021. Berkshire has also built a $390 million new stake in digital financial services business Ally Financial (ALLY:NYSE).
The Buffett-run firm also owns stakes in Bank of NY Mellon (BK:NYSE), US Bancorp (USB:NYSE), Mastercard (MA:NYSE) and Visa (V:NYSE).
