Warren Buffett’s Berkshire Hathaway sold the vast majority of its stake in Wells Fargo in the first quarter, unloading an investment that has been a staple of the conglomerate’s portfolio dating back to 1989.
The company disclosed it had shed 99 per cent of its remaining stake in the bank — or some 51.7m shares — reducing its holdings in Wells Fargo to just $26.4m at the end of March.
Berkshire had once been the bank’s largest shareholder, owning nearly a tenth of Wells’ stock with its stake eclipsing $30bn in value in January 2018, according to filings with the Securities and Exchange Commission.
The bank, however, is still working through the fallout from a fake accounts scandal that first surfaced in 2016. Last year Wells agreed to pay $3bn to cover criminal and civil damages and it has been under close scrutiny from the Federal Reserve, which has imposed an asset cap since 2018, limiting its growth until it improved its governance and internal controls.
After the revelations first came to light, Buffett said that Wells was “a great bank that made a terrible mistake” and he championed the executive changes the San Francisco-based lender had planned. But as the controversy deepened, his commitment to Wells waned, and in 2017 he criticised management for not intervening sooner to limit the scandal.
Berkshire began reducing its stake in Wells in 2017 but the pace quickened dramatically over the past three years, according to Bloomberg data.
Buffett has also slashed stakes in other banks over the past 12 months, including offloading an investment he made in Goldman Sachs during the financial crisis.
Berkshire’s US banking sector investment is now focused largely on a single business: Bank of America. The filing on Monday showed the stake unchanged at just north of 1bn shares, or roughly 12 per cent of outstanding Bank of America shares. The position was worth $40bn at the end of the first quarter.
Berkshire reduced its stakes in drugmakers including Merck, Bristol-Myers Squibb and AbbVie in the first quarter, cut more than half of its holding in oil major Chevron, and sold the entirety of its positions in Suncor Energy and Symphony Financial.
Buffett was light on additions over the same period, disclosing only a new investment in insurance broker Aon worth $943m. Last year, Berkshire invested in rival broker Marsh & McLennan.