- Warren Buffett’s Berkshire Hathaway took a $1.6 billion hit to its portfolio after Bank of America and Wells Fargo shares dropped more than 5% on Wednesday.
- Shares slumped after the banks reported double-digit declines in revenue and net income for the third quarter.
- Berkshire boasted an almost 12% stake in Bank of America — the second-biggest holding in its portfolio after Apple — and owned more than 3% of Wells Fargo at the last count.
- Buffett’s company plowed $2.1 billion into Bank of America over 12 straight trading days to August 4, while it has slashed its Wells Fargo position by more than 60% this year.
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Warren Buffett’s Berkshire Hathaway suffered a $1.6 billion blow to its portfolio from just two stocks on Wednesday, as Bank of America and Wells Fargo slumped more than 5% after reporting their third-quarter earnings.
Bank of America posted an 11% slump in revenue and a 16% drop in net income, as the pandemic continued to weigh on its business. Wells Fargo disclosed steeper declines of 14% and 56% respectively.
Berkshire has significant exposure to Bank of America, as the lender is the second-largest holding in the company’s stock portfolio after Apple. Buffett’s company added to the position over 12 straight trading days to August 4, spending $2.1 billion to boost its stake to 1.03 billion shares or almost 12%.
The slump in Bank of America stock on Wednesday wiped $1.4 billion off the value of Berkshire’s increased position, reducing it to $24.4 billion. The bank’s stock price is down by more than a third this year.
Berkshire took a smaller hit from Wells Fargo as it has a smaller position in the troubled lender.
The conglomerate has been a shareholder for more than 30 years, and counted the bank among its five most-valuable holdings for most of that period. It owned more than 500 million shares valued at north of $27 billion in 2016.
However, it gradually trimmed the holding over the next few years, then slashed it by more than 60% this year. As a result, it held fewer than 140 million shares in September, representing 3.3% of the total shares outstanding — its smallest stake in the bank 17 years.
Wells Fargo's stock slump on Wednesday cut the value of Berkshire's position by about $205 million, to $3.2 billion. The bank's shares are down 57% this year.
The $1.4 billion hit from Bank of America and the $205 million blow from Wells Fargo meant Berkshire saw a total of $1.6 billion in value erased from its stakes, assuming their size hasn't changed since it last updated investors.