Buffett’s Berkshire Hathaway Dumps US Bank Stocks For Gold

Berkshire Hathaway’s unloading of billions of dollars from bank stocks is exacerbating the hurt on the nation’s biggest financial institutions, Reuters reported.

Warren Buffett, the company’s chairman and CEO, has sold shares of Wells Fargo and J.P. Morgan Chase and dropped an investment in Goldman Sachs.

Based on its second quarter filing with the Securities and Exchange Commission, Reuters reported Berkshire reduced its Wells Fargo stake by 26 percent to 237.6 million shares, lowered its stake in J.P. Morgan by 62 percent to 22.2 million shares, and sold its remaining 1.9 million Goldman shares.

Bank stocks have slid this year as many of the nation’s largest banks have set aside tens of billions of dollars to account for potential loan losses amid the pandemic, The Wall Street Journal (WSJ) reported.

At the same time, Berkshire Hathaway reported buying stock in a Canadian company, according to Reuters. Buffett bought a 20.9 million share investment worth $563.6 million in Barrick Gold Corp., a Toronto-based mining company that produces gold and copper in 13 countries, according to Reuters.

Once worth $32 billion, Berkshire has dropped more than half of its Wells Fargo shares, as the bank was hurt by scandals, Reuters reported.

Earlier this year, Wells Fargo agreed to pay $3 billion to settle charges stemming from a scandal involving widespread mistreatment of customers.

In May, the banking industry was the runt of the litter of the stock market rally as interest rates sank and loans crumbled.

The 45 percent drop in the KBW Bank Index, a benchmark stock index of the banking sector, has eliminated $795 billion from its 24 constituents, which include J.P. Morgan Chase, Bank of America, Citigroup and Wells Fargo.

Still, Reuters reported Buffett has not given up on the banking industry. Berkshire Hathaway remains invested in Bank of America, including a recent investment of more than $2 billion, giving it a nearly 12 percent stake worth over $27 billion.

In addition, Berkshire also has nearly 100 operating units in the U.S., including Geico, the Maryland-based auto insurer; BNSF, the largest railroad in the U.S.; and Dairy Queen, the soft-serve ice cream company.