Last quarter, Warren Buffett's investment company, Berkshire Hathaway, reduced its holdings in Bank of New York Mellon and US Bancorp while increasing its commitment to Bank of America and purchasing new shares in Capital One. This move is in line with Buffett's cautious approach to bank stocks, which he has been reducing since 2020. However, he has remained bullish on Bank of America and has increased his holdings in the company despite a decline in its value in the first quarter of this year.
Buffett has a long history with Bank of America, having invested $5 billion in the company in 2011 when it was facing significant losses due to subprime loans. He has expressed confidence in the bank's management and continues to see it as a good investment. Berkshire also added to its holdings in Capital One and Ally Financial, while selling off its stake in Jefferies Financial Group and maintaining its position in Citigroup.
Berkshire Hathaway's move is not unique among high-profile investment managers, as Bridgewater Associates, the world's largest hedge fund, also sold off around $180 million in bank stocks last quarter. This included the majority of its holdings in Bank of New York Mellon and US Bancorp, as well as positions in other US lenders.
Overall, Buffett's cautious approach to bank stocks suggests that he is still uncertain about the long-term prospects of the sector, especially in light of the current crisis. However, his continued commitment to Bank of America and other financial institutions suggests that he sees potential for growth in certain areas.
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