Berkshire Hathaway, the holding company headed by billionaire investor Warren Buffett, continues to pare down its ownership stake in Wells Fargo & Co., but the latest reduction was less than analysts were projecting.
In a Berkshire Hathaway regulatory filing Monday, the company's stake in Wells Fargo dropped by 10.12 million shares, or by 7.4% from 137.5 million to 127.38 million.
The 137.5 million shares were listed as of Sept. 4 and represented a 3.3% stake worth $3.46 billion at that time at $25.19 a share.
The 127.38 million shares as of Monday were worth $3.17 billion at Tuesday's opening share price of $24.92.
Analysts had speculated that Berkshire Hathaway's stake in Wells Fargo could have been zero when the company submitted its mid-November filing.
Bram Berkowitz, a contributor to The Motley Fool, said Oct. 31 that "many believe the love affair between Buffett and Wells Fargo may soon be finished for good."
Bloomberg News reported Oct. 19 that Buffett may have cut the Wells Fargo holdings because the bank's board went against his advice and hired a Wall Street chief, Charlie Scharf, as its new chief executive in October 2019.
The bank is on its third full-time chief executive since the fraudulent customer-account scandal erupted in September 2016.
Berkshire has owned a major Wells Fargo stake since the late 1980s, with the bank being among its top-five holdings during much of that period. It held as much as a 13% stake in 1994.
When the scandal became public, Berkshire owned 504.3 million shares of Wells Fargo, or 9.9% of the bank that was valued at more than $27 billion — representing Berkshire's largest investment stake.
However, Buffett also has been quoted as saying “lose money for the firm and I will be very understanding. Lose a shred of reputation for the firm, I will be ruthless.”
In February 2019, Berkshire still owned 451.36 million shares of Wells Fargo worth $22.95 billion at that time.
Fast forward to Feb. 14, 2020, and a Berkshire regulatory filing listed it with 347.6 million shares and an 8.4% stake worth $16.8 billion at that time at $48.32 a share.
Analysts have said for years that Wells Fargo offers an intriguing insight into Buffett’s investment strategy, which centers on being a long-term value investor, including buying struggling companies with strong brands at a bargain.
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