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Berkshire-Backed StoneCo Tumbles after ITUB Ups Ante

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StoneCo

StoneCo (STNE) was trading down 27.6% as of 1:30 PM ET. The negative price action was driven by an announcement by Itaú Unibanco Holding (ITUB). Reuters reported, “Rede, Itaú’s card processor, will pay merchants in two days, compared with the usual 30 days, in a move that is likely to increase competition in the sector.”

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Berkshire Hathaway

StoneCo counts Berkshire Hathaway (BRK-B) among its investors. StoneCo saw an upward price action of a whopping 122% in the first quarter, which is the highest among Berkshire’s major holdings. The stock surged in March after its earnings crushed analysts’ estimates

Berkshire Hathaway chairman Warren Buffett has a flair for banking and payment industry stocks. Berkshire also holds a stake in Visa (V), Mastercard (MA), and American Express (AXP). Last month, Apple (AAPL), which was Berkshire’s biggest holding at the end of the fourth quarter, also announced a credit card in association with Goldman Sachs (GS). GS also forms part of Berkshire’s portfolio.

Indian startup

Berkshire has also invested in Paytm, an Indian startup that’s into payment services and e-commerce. In its e-commerce business, Paytm competes with Amazon (AMZN) and the Walmart-owned (WMT) Flipkart.

While Berkshire has an enviable track record of beating markets handsomely over the last five decades, its performance hasn’t been as impressive over the last decade. The stock massively underperformed the S&P 500 (SPY) in the first quarter. See Berkshire Hathaway Underperformed the Markets in Q1 for more analysis.

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