Berkshire Hathaway Sells $2.5B Stake In Wells Fargo

Warren Buffett has once again reduced his company’s investment in Wells Fargo & Co., favoring Bank of America (BoA) instead.

The Financial Times (FT) reported Berkshire Hathaway now owns 138 million shares in Wells Fargo, a 3.3 percent stake in the nation’s fourth largest U.S. bank, down from more than 8 percent last year.

Last month, Berkshire reduced its Wells Fargo stake by 26 percent to 237.6 million shares, based on its second quarter report with the Securities and Exchange Commission (SEC).

Once considered one of the country’s strongest lenders, the San Francisco-based bank agreed earlier this year to pay $3 billion to settle allegations that the bank’s aggressive sales goals for more than a decade led to widespread consumer abuses, including millions of accounts opened without customers’ consent.

Berkshire first bought Wells Fargo shares in 1989, the newspaper reported. At the close of last year, Berkshire owned 8.4 percent of the company.

But since the end of June, Berkshire has unloaded more than 100 million Wells Fargo shares worth nearly $2.5 billion, according to an SEC filing released on Friday. The most recent drop comes atop 86 million shares sold during the second quarter.

As a result of having less than 5 percent ownership, Berkshire will not be required to file a public report to the SEC when it buys or sells shares, FT reported.

Since the end of last year, Wells Fargo stock has fallen by 52 percent to $24.79 Friday (Sept. 4), down from $51.96 on Dec. 30.

In July, Wells Fargo reported its second quarter revenues fell to $17.8 billion, down from $21.6 billion compared to the same period last year, while its net interest income was $9.9 billion, down $2.2 billion from one year ago.

In July, Berkshire Hathaway upped its stake in BoA by over $800 million as it purchased 34 million shares, a 4 percent increase of its holding in the company. Berkshire now has about $24.1 billion invested, which equals an 11.3 percent stake.

Last month, Wells Fargo initiated a long-term cost-cutting effort.

Facing pressure to reduce costs, Wells Fargo said it has ended a moratorium on layoffs as it prepares for cuts that could total in the billions. Wells Fargo declined to reveal how many jobs would be cut. But sources told Bloomberg last month that tens of thousands of positions could be cut to trim costs.