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Financials Overview: Week of August 14–August 18, 2017

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Financials Overview: Week of August 14–August 18, 2017 PART 1 OF 3

Berkshire Hathaway Is Betting Big on Financials

Berkshire Hathaway investing in the financial sector

Although Warren Buffett’s Berkshire Hathaway (BRK.A) has sold its stake in General Electric (GE), Buffett seems to be overweight in the financial sector (XLF). In 2Q17, Berkshire Hathaway (BRK.A) acquired a stake of 17.5 million shares in Synchrony Financial, the financing arm of GE. 

Synchrony is the largest provider of private-label credit cards for large companies such as Amazon (AMZN), Walmart (WMT), and Lowe’s (LOW).

Berkshire Hathaway Is Betting Big on Financials

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Berkshire Hathaway also increased its holdings in Bank of New York Mellon (BK) by 52.2% to 50.2 million shares. In June, Berkshire Hathaway announced that it would convert warrants in Bank of America (BAC) to 700 million common shares, which would make it the bank’s largest shareholder. 

The financial sector, which is one of the worst performers year-to-date among the S&P 500 sectors, is expected to report healthy growth in the next few quarters due to rising interest rates and relaxed regulations.

Top-level changes at Wells Fargo

As a part of its clean-up efforts, Wells Fargo (WFC) is replacing three of its 15 board members, including the chairman. Stephen Sanger, the current chairman of the bank, plans to step down at the end of the year and should be replaced by the current vice chair, Elizabeth Duke.

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