Mar. 19, 2009 | Filed Under: BRK-A, WFC, WXP, USB, WSC, MTB, TMK, STI, BAC,
The ongoing financial crisis reduced many financial stocks to a fraction of their peak values, leaving their investors lamenting on the losses. Lately, the financial stocks are on fires, with XLF, the Financial Select Sector SPDR, rebounding from a 52 week low of $5.88 to today’s close of $9.41, a little over 60%.
Financial stocks, from banks to credit card and to insurance company, are definitely within Warren Buffett’s circle of competence. Perhaps that is why as of December 31, 2008, of the Warren Buffett’s $52 billion common stock portfolio in Berkshire Hathaway, 29.6% was invested in financial stocks. The fall and rise of financials impact the performance of the Investment Guru disproportionally.
Top on the list is Wells Fargo & Company (WFC). Buffett had 312 million shares of WFC in his Berkshire Hathaway portfolio and over two million shares in his personal account. The bank company bought Wachovia on the verge of collapse last year and has since seen its stock behaved like Wachovia in its final days. Recently the company had to cut quarterly dividend from $0.34 to $0.05 in order to preserve capital in preparation for a long and severe economic down turn. WFC entered year 2009 at around $30, it declined to a 52-week low of $7.80, and today it closed at $17.22, more than doubled from its bottom.
American Express (AXP) takes the second spot in terms of weighting in the portfolio. Warren Buffett owned 151.61 million shares or 12.95% of the company. The company has seen its share of trouble in the current economic recession. In January it reported a profit from continuing operations of $238 million, a 72% percent fall from a year earlier.
It had to accept $3.39 billion from the U.S. Treasury to boost capital as surging consumer defaults forced it to set aside more reserves and the market for bonds backed by credit-card debt seized up. Further, it cut 7,000 jobs and froze hiring and management raises to help reduce expenses by $1.8 billion this year. Its stock price was above $18 dollars as it entered year 2009, it reached a 52-week low of $9.71 and rebounded since to today’s close of $14.09.
US Bancorp (USB) is the another bank that Warren Buffett has a large position. As of 4Q08, he had 67.55 million shares or 3.84% of the company. Like Wells Fargo, USB also had to announce dividend cut in order to preserve capital. Quarterly dividend was cut from $0.425 to $0.05, or by 88.2%. In January, it reported it 4Q08 results, diluted earnings per common share of $.15 in the current quarter were lower than the $.53 of diluted earnings per common share reported for the fourth quarter of 2007. Included in fourth quarter of 2008 results were securities and other market valuation losses totaling $.09 per diluted common share and a provision for credit losses in excess of net charge-offs equal to $.25 per diluted common share. Its stock entered year 2009 at $25 and reached a 52-week low of $8.06. It rebounded since to today’s close of $15.86.
Wesco Financial Corp (WSC) is a insurance company headed by Warren Buffett’s long time second man Charlie Munger. Berkshire Hathaway owns 80.1% of WSC. It reported its 4Q08 and 2008 annual results on February 28, 2009. Its consolidated net income for the fourth quarter of 2008 amounted to $23,662,000 compared with $34,420,000 for the fourth quarter of 2007; for the year, consolidated net income was $82,116,000 compared with $109,161,000 for 2007. Its stock also experienced a rough ride from $300 at the beginning of the year to as low as $208 in early march. Today it closed at $279.
Warren Buffett’s other but less significant financial holdings include: M&T Bank Corp (MTB), Torchmark (TMK), Suntrust Banks Inc. (STI), and Bank of American (BAC).
If you feel the urge to participate in the financial stock rebounding but are not sure which financial companies to buy, here is the complete list of Warren Buffett’s Financial Holdings for you to start your research:
Warren Buffett’s Financial Holdings
Wells Fargo & Company
American Express Company
Wesco Financial Corp
M&T Bank Corp.
SunTrust Banks Inc.
Bank of America Corp.
Filed Under: BRK-A, WFC, WXP, USB, WSC, MTB, TMK, STI, BAC,
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