The conglomerate of billionaire Warren Buffett has reoriented its investments in banks by reducing its holdings in many big names in the financial sector.
This is a historic turning point for the Warren Buffett conglomerate. Berkshire Hathaway significantly reduced its stakes in some of the largest US banks in the second quarter and invested in gold, an asset the Omaha Oracle has long denigrated.
According to documents given to the regulator on Friday, Warren Buffett’s company sold 85.6 million Wells Fargo shares in the quarter, reducing its stake from 7.9% to 5.8%. The establishment is all the more under pressure, as it is still struggling to turn the page on the phantom accounts scandal. The holding company also sold 35.5 million shares of JPMorgan, lowering its stake from 1.9% to 0.7%, and a substantial minority of its long-standing PNC Financial stake.
Close position in Goldman Sachs
The billionaire investor has also completely closed his position in Goldman Sachs. At the end of the previous quarter, Berkshire Hathaway held nearly 2 million shares of the investment bank. Its stake in Goldman Sachs dates back to the time of the financial crisis. It was worth just under $ 300 million at the end of March.
Holdings in M&T Bank, Bank of New York Mellon, US Bancorp, Mastercard and Visa have all been reduced. In total, Berkshire shed $ 12.8 billion in shares during the quarter. The conglomerate is not turning its back on the entire financial sector, the position in Bank of America has been strengthened to take it beyond 12%.
Even more surprisingly, the conglomerate took a 1.2% stake in mining group Barrick Gold, taking advantage of the precious metal’s soaring to new all-time highs. Barrick’s stock gained 7% in Toronto in electronic trading. The spectacular rise of the yellow metal increases the margins of mining groups because of the stability of production costs.
Negative real rates
Due to the economic crisis associated with the covid-19 pandemic, banks have recorded provisions of $ 76 billion to absorb future default losses. At the same time, the American central bank reduced its key rates to 0% to support the economy: to protect themselves from negative real rates, taking inflation into account, investors massively buy gold.
Warren Buffett is certainly notorious for aversion to gold, but he once bet big on metals. By 1997, he had purchased nearly 130 million ounces of silver. He had acquired them for $ 6 and resold them shortly after: “ I was the king of money for a while », He confided a little later.