Warren Buffett Doubles Down on Big Banks as Berkshire Trims Apple Stake

(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. took advantage of a plunge in bank stocks to pile even further into his bet on financials, while trimming a giant stake in Apple Inc.

• Berkshire spent the last half of the year snapping up more shares of banks and insurers, moves that made the company a major shareholder in four of the five largest U.S. banks. The Omaha, Nebraska-based conglomerate boosted its stake in JPMorgan Chase & Co. and Bank of America Corp. in the last three months of the year.

Key Insights

• Berkshire reduced its Apple stake by 1 percent in a period that marked its first holiday quarter sales decline in 18 years and saw shares plunge 30 percent. It’s still the biggest holding in Buffett’s portfolio, and the stock has rebounded about 8 percent this year.
• Buffett didn’t enjoy his time investing in International Business Machines Corp., but he may have made quite a haul on its latest purchase. Berkshire owned 4.2 million shares of Red Hat Inc. at year-end, though it’s unclear if they were bought before IBM’s purchase of the company sent the stock up 45 percent on Oct. 29.
• Berkshire also boosted its stakes in regional lenders, including PNC Financial Services Group Inc. and U.S. Bancorp. That could be a bet on consolidation in the industry, as this month’s announced merger between SunTrust Banks Inc. and BB&T Corp. has led to speculation that more deals are coming.

Market Reaction

• Oracle shares dropped 1.3 percent at 4:56 p.m. in New York, after the end of regular U.S. trading. Apple was down as well, losing about 0.5 percent.

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• Buffett had long praised JPMorgan’s Jamie Dimon even as Berkshire Hathaway didn’t invest in the stock. Berkshire eventually plowed in when the timing aligned, according to Vice Chairman Charles Munger. “As investment has gotten harder and the banks have done better and better, we’ve finally reached a crossing point where he was willing to act,” Munger said Thursday in an interview after the Daily Journal Corp. meeting in Los Angeles.
• Berkshire’s dalliance with Oracle Corp. was short-lived. After taking a $2.1 billion stake in the software firm in the third quarter, Berkshire had sold out by year-end. Buffett has typically taken a more cautious approach to technology companies, given his lack of familiarity with the space.
• Buffett likes to take advantage of what he views as fear in the markets, and that certainly hit banks last quarter. The S&P 500 Financials Index dropped 14 percent in the fourth quarter, the worst period in more than seven years.
• For more on Berkshire’s holdings, click here.
• To check out more 13F filings, click here.

To contact the reporters on this story: Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net;Ben Foldy in New York at bfoldy@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Josh Friedman

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