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Buffett's Latest Word on Stock Valuations, Holdings, and Taxes

PART:
1 2 3 4 5 6
Part 5
Buffett's Latest Word on Stock Valuations, Holdings, and Taxes PART 5 OF 6

Why Buffett Is Ready to Hold Bank of America for a Long Time

Buffett on Bank of America

When asked about his favorite banking stocks in his recent interview with CNBC, billionaire investor Warren Buffett said that he is optimistic about Bank of America (BAC) and confident in its future performance.

Why Buffett Is Ready to Hold Bank of America for a Long Time

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Buffett stated: “Bank of America has done a sensational job under Brian Moynihan…We will be holders of BofA stock for a long, long, long time.” Under CEO (chief executive officer) Brian Moynihan, Buffett believes, the bank has done well and has gotten back on track.

Bank of America has returned ~13.3% on a YTD (year-to-date) basis as of October 04, 2017. In the past two years, the stock has returned nearly 65.5%. The Financial Select Sector SPDR ETF (XLF), which tracks the performance of the financial sector, has risen ~10.7% YTD.

Investment in financial stocks

Warren Buffett seems to love financial (XLF) and banking (KBE) stocks. Buffett’s Berkshire Hathaway portfolio (BRK.B) was heavily tilted toward the financial sector (XLF) in 2Q17, and the sector represented about 33.0% of the firm’s portfolio in 2Q17 (VFH).

The firm also has a strong position in American Express (AXP), U.S. Bancorp (USB), and Moody’s (MCO). These stocks represented 7.9%, 2.7%, and 1.9%, respectively, of the firm’s portfolio in 2Q17.

In the next and final part of this series, we’ll analyze Buffett’s view of passive investment.

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