Warren Buffett’s Berkshire Hathaway made a $954 million bet on credit card and banking company Capital One in the first quarter, part of the investment group’s sell-off of billions in value. One of the few new shares during the dollar stock period.
The investments revealed Monday suggest Berkshire and Buffett are comfortable with the health of the credit card industry and consumer wallets even as several regional banks have been swept away by the financial turmoil. Capital One claims to be the third largest issuer of Visa and Mastercard credit cards in the US.
Berkshire has concentrated its financial sector investments in a handful of big U.S. banks — Bank of America and Citigroup — as well as credit card companies such as American Express, Visa and MasterCard.
Berkshire Chief Executive Warren Buffett sounded cautious about the outlook for the banking industry earlier this month, warning that the speed of bank runs in the age of online accounts has changed investment calculations for the sector.
“You have no idea how sticky deposits are. . . that changes everything,” he told shareholders gathered in Omaha for the company’s annual meeting. “You can run in seconds. “
Monday’s regulatory disclosure also showed that Berkshire exited its positions in US Bancorp and Bank of New York Mellon in the first quarter.
Berkshire bought a 2.6 percent stake in Capital One, complementing a big bet it made last year on auto and home lender Ally Financial. Berkshire modestly trimmed its position in Ally in the first quarter.
Shares of Capital One rose 6% in after-hours trading.
Capital One has been increasing its provision for credit losses as the economy slows and inflation catches up with consumers. But the company isn’t clouded by the same concerns plaguing the broader banking sector. Its shares are down about 4% this year, compared with a 26% decline in the KBW Bank Index.
Berkshire Hathaway also revealed that it had cut its stake in oil major Chevron by about a fifth, selling about 35 million shares between its own accounts and a portfolio managed by a subsidiary .
The company exited its remaining stake in chipmaker TSMC, and Buffett has hinted at geopolitical tensions between Taiwan and mainland China in stock sales this year and last year.