Berkshire Builds On Big Position in Banks -- WSJ

By Nicole Friedman 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 15, 2018).

Warren Buffett's Berkshire Hathaway Inc. is boosting its bet on the U.S. banking industry.

The Omaha, Neb., conglomerate took a $4 billion stake in JPMorgan Chase & Co. in the third quarter, giving it sizable stakes in three of the four largest American banks. JPMorgan is the largest U.S. bank by assets.

Berkshire holds roughly 9% stakes in Bank of America Corp. and Wells Fargo & Co., the second and fourth largest by assets, and is the top shareholder of both banks. The new investment in JPMorgan gives Berkshire about a 1% stake and doesn't place the company among JPMorgan's top five shareholders, according to Factset.

Berkshire also took a new stake during the quarter in Pittsburgh bank PNC Financial Services Group Inc. and increased its holdings of Goldman Sachs Group Inc., Bank of America, Bank of New York Mellon Corp. and U.S. Bancorp. Other banking investments include Wells Fargo and M&T Bank Corp.

Berkshire disclosed the new positions as of Sept. 30 in a securities filing Wednesday.

Berkshire has made several high-profile investments in banking and payment companies over the years. In the wake of the 2008 financial crisis, Berkshire provided much-needed capital to Bank of America and Goldman as both struggled to keep the confidence of investors.

Berkshire also owns stakes in American Express Co., Mastercard Inc. and Visa Inc. and recently invested about $600 million in two financial-technology companies.

Mr. Buffett has said he holds a small personal stake in JPMorgan, and he told Yahoo Finance earlier this year that Berkshire should have invested in the bank, calling it a "terrifically run operation." The new Berkshire investment in JPMorgan follows a number of existing ties between the two companies.

Berkshire portfolio manager Todd Combs is on the JPMorgan board, and JPMorgan Chief Executive James Dimon is a longtime friend of Mr. Buffett, Berkshire's chairman and CEO.In June, they wrote an op-ed piece together that urged companies to consider ending the practice of providing quarterly earnings guidance.

JPMorgan declined to comment.

Mr. Buffett and Mr. Dimon have also teamed up with Jeff Bezos, CEO of Amazon.com Inc., to form a health-care venture aimed at lowering costs for employees of the three companies.

JPMorgan is on track to report a record year: It notched a profit of $8.38 billion in the third quarter, with strength across its businesses. The bank's stock has tripled in the past 10 years, easily outpacing the KBW Nasdaq bank index.

Berkshire is sitting on more than $100 billion in cash, as Mr. Buffett has struggled to find large acquisitions. Berkshire owns operating businesses including a railroad and manufacturers and invests in public equities.

In a sign of the pressure for Mr. Buffett to spend more of his company's cash, Berkshire repurchased more than $900 million of its shares in the third quarter.

Berkshire also bought new stakes in Oracle Corp. and Travelers Cos. in the third quarter. It sold off its holdings of Walmart Inc. and Sanofi SA.

--Emily Glazer contributed to this article.

Write to Nicole Friedman at [e-mail]

(END) Dow Jones Newswires

November 15, 2018 02:47 ET (07:47 GMT)

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