Buffett's faith in this sector finally starting to pay off

Buffett's faith in this sector finally starting to pay off
Rally in bank stocks pushes share price of Berkshire to 13-month high
DEC 11, 2012
Warren Buffett's Berkshire Hathaway Inc., the largest investor in Wells Fargo & Co. and holder of preferred shares in Bank of America Corp., climbed to a 13-month high as the lenders rallied. Berkshire Class A shares rose about 1 percent to $124,440 at 4 p.m. in New York, the highest value since April 2011. San Francisco-based Wells Fargo, the largest U.S. home lender, gained 1.5 percent while Bank of America advanced 4.5 percent. Buffett, 81, said last month that U.S. banks have “liquidity coming out of their ears” and are in better shape than their rivals in Europe, which is struggling with a debt crisis. His Omaha, Nebraska-based firm has been adding to holdings of Wells Fargo and in 2011 it invested $5 billion in Bank of America in exchange for preferred shares and warrants. Berkshire gets a “bump when you see risk rally” for financial stocks, Tom Lewandowski, an analyst at Edward Jones & Co. in St. Louis, said in a phone interview. For investors “who can deal with the succession risk that comes along with Warren Buffett in owning Berkshire shares, I think it's still a good long-term investment opportunity,” he said. Buffett, who built Berkshire from a failing textile maker into a company valued at more than $200 billion that sells products from insurance to ice cream, is preparing for his eventual departure. He has said that his son Howard, a Berkshire director, would guard the culture as non-executive chairman, while the board has picked his successor as CEO along with two backups. The candidates haven't been publicly identified. Portfolio Managers Oversight of the investment portfolio will fall to Ted Weschler and Todd Combs, former hedge-fund managers whom Buffett hired in the past two years. Berkshire hit a “home run” with both and may add another money manager to help, Buffett said at the company's annual meeting on May 5. Berkshire's stock portfolio, which also includes stakes in International Business Machines Corp. and Coca-Cola Co., was valued at $89.1 billion at the end of March. Buffett still oversees the largest investments, while Weschler and Combs manage $2.75 billion each, Buffett said at the meeting. --Bloomberg News--

Latest News

IRA assets swell to $19.2 trillion as 401(k) rollovers drive growth
IRA assets swell to $19.2 trillion as 401(k) rollovers drive growth

IRAs now hold nearly twice the assets of 401(k) plans — and most of that money didn't arrive through annual contributions.

Women feel confident about saving, but many still keep cash in low-yield accounts
Women feel confident about saving, but many still keep cash in low-yield accounts

A new survey finds that many women prioritize financial security but continue to leave savings in accounts that may not keep pace with inflation.

SEC seeks comment on prediction-market ETFs after May pause
SEC seeks comment on prediction-market ETFs after May pause

Roundhill, Bitwise and GraniteShares funds remain on hold while the agency weighs how novel ETFs should be regulated.

Dump investment banks, buy alternative asset managers, says Oppenheimer
Dump investment banks, buy alternative asset managers, says Oppenheimer

"Shares of alternative assets managers have lagged this year as investors grow wary of private-credit exposure."

TaxStatus rolls out rules-based tool to flag advice gaps
TaxStatus rolls out rules-based tool to flag advice gaps

The fintech platform is touting a new AI-free Planning Observations feature, which draws on IRS tax records to uncover opportunities for advisors.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.