Warren Buffett’s Berkshire Hathaway Sold Its Wells Fargo Shares — Should You Do the Same?

Berkshire Hathaway Shareholders, Omaha, USA - 03 May 2019
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When Warren Buffett pulls out of a stock, Wall Street takes notice. Wells Fargo learned that lesson early this week after Buffett’s Berkshire Hathaway disclosed that it sold its remaining shares in the bank during the first quarter, ending a decades-long investment and sending Wells Fargo’s stock price close to a 2022 low.

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Buffett had been a top investor in Wells Fargo in recent years even though the bank has been engulfed in a series of scandals and problems, CNN Business reported. In 2020 it got hit with a $3 billion fine due to millions of fake accounts having been created at the bank. Two years earlier, Wells Fargo had to set aside $285 million to refund foreign-exchange and wealth-management clients it had overcharged.

Partly because of those scandals, the Oracle of Omaha began trimming his stake in Wells Fargo three years ago. He still had a small position in the bank during the 2021 fourth quarter before bailing this year amid pressure from shareholders.

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Shares of Wells Fargo fell more than 2% in early trading on May 18. The stock is down nearly 20% for the year amid a broader stock market slump.  

Berkshire exited Wells Fargo as the bank continues to deal with regulatory issues and attempts to improve efficiencies, which include job cuts and the possible sale of some of its businesses, Bloomberg reported.

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Despite those problems, the 31 analysts who follow Wells Fargo still have an average rating of 2 on the stock, according to Yahoo Finance. That puts it firmly in “buy” territory. Nearly half of the analysts (15 of 31) queried have a “hold” rating on the stock, with eight rating it a “buy.”

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For investors with large positions in banking/finance, the good news is that Buffett remains bullish on the sector despite selling all of his Wells Fargo shares. Berkshire is still invested in plenty of other banking and financial giants. Two of its top four stock holdings are Bank of America and American Express, CNN noted. The company also significant positions in Citigroup, Ally Financial and Geico.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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