With Warren Buffett’s $137 billion cash pile, you would think that he’s staying on the sidelines–but no. The greatest value investor is quietly dumping his holdings. First, he sold off all of Berkshire’s airline stocks. Now, he’s following the same formula to sell his bank holdings.
Last February, Warren Buffett said that bank stocks are among his most favorite. In a CNBC interview, Berkshire’s CEO stressed:
I feel very good about the banks we own. They’re very attractive compared to most other securities I see.
Famed as a long-term investor, Buffet is not one to quickly change his tune. But this time appears to be different.
On Wednesday, Barron’s published a bombshell report that the Oracle of Omaha sold nearly 500,000 shares of U.S. Bancorp (NYSE:USB) worth $16.3 million on May 11-12. As Buffett cashed out, Berkshire’s stake in the bank fell under 10%.
In April, Berkshire sold almost 860,000 Bank of New York Mellon (NYSE:BK) shares for about $30 million. The sale cut the conglomerate’s stake in the bank from 10.4% to 9.8%.
As Berkshire’s ownership in both banks is now below 10%, Buffett can quietly dump his bags just like he did with his airline holdings.
Last month, Buffett sold 13 million shares of Delta Air Lines (NYSE:DAL) and 2.3 million shares of Southwest Airlines (NYSE:LUV). The sale drove Buffett’s stakes in both airlines just a hair below 10%, allowing Berkshire to liquidate their entire holdings in DAL and LUV without the obligation to disclose the trades.
Then earlier this month, the investment world woke up to the news that Buffett, who previously championed the airline industry, got rid of all of his holdings in the four largest U.S. airlines.
First, Buffett quietly trims his equity holdings to fly under the radar, and then he liquidates the entire position. It seems that the same script is about to play out in the banking sector. You’ve been warned.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. The writer does not own any stocks of the companies mentioned.
This article was edited by Sam Bourgi.