Warren Buffet apparently likes banking. The most recent Securities and Exchange Commission filings made available to the public shows the Oracle of Omaha putting money in the banks, lots of money in the banks. Warren is the largest shareholder and CEO of Berkshire Hathaway and through Berkshire Hathaway, Buffet is betting big on banks. The Berkshire Hathaway mega corporation has over $100 billion in stock holdings and the largest positions by far, based on the most recent filings, are in banks and financials.
The banks Buffet backs the biggest are Wells Fargo, American Express, U.S. Bancorp, Bank of New York Mellon, and M&T Bank. Warren may not or may not personally have banking relationships with these institutions, but through Berkshire Hathaway, he has several billion dollars’ worth of their stock.
Berkshire Hathaway has investments in over 40 individual publicly traded stocks. Of the 40+ stocks, four are directly in banking with the fifth, American Express Corp, operating as a somewhat stealthy bank.
American Express Corp is a non-traditional bank holding company. The principal products and services of American Express are charge and credit card payment products and travel-related services. However, American Express is also the holding company for American Express Bank, FSB and American Express Centurion Bank. Both of these banks are among the top 50 banks in the US and have combined assets of almost $75 billion which places the company among the top 35 largest US based banks.
U.S. Bancorp or US Bank is an extra-large, regional bank. US Bank operates over 3,000 banking locations in 25 states. The bank provides a wide range of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions.
M&T Bank is a regional bank that ranks as the 26th largest US based bank based on assets. M&T Bank has over 700 bank branches in Delaware, Maryland, New York, Pennsylvania, Virginia, West Virginia, and Washington, D.C. M&T offers a comprehensive array of financial products and services for personal, business and commercial banking customers.
The Bank of New York Mellon is an investments company. The bank is the 6th largest US bank but does not provide traditional consumer and business banking products. BNY Mellon predominantly offers investment management, investment services and wealth management. The company operates internationally serving financial institutions, corporations, government agencies, foundations and high-net-worth individuals.
Wells Fargo Bank is the third largest bank in the U.S. Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance products and services. The bank operates more than 9,000 locations, 12,500 ATMs, and has offices in 36 countries.
Consensus forecasts say we are in a rising interest rate environment. With the Fed still engaged in directing monetary policy, short term rates are likely to remain relatively low and the yield curve will steepen. In general, these are good signs for future banking profits. Maybe Buffet simply sees the writing on the wall for fatter bank profits or is there something in the future that only the Oracle is seeing.