Ironically, the MVP of the banking industry is not a banker—Warren Buffett, chairman and CEO of Berkshire Hathaway (NYSE:$BRK-A) is now the largest shareholder in Wells Fargo (NYSE:$WFC) and Bank of America (NYSE:$BOA).
Buffet solidified his 700 million shares of Bank of America earlier this week, while his share of Wells Fargo has been in place since the early 1990s. Buffett also reflects major positions in M&T Bank, U.S. Bancorp, Bank of New York Mellon, and American Express.
And if that’s not enough? During the financial crisis of 2008, Buffet injected $5 billion of Berkshire Hathaway capital into Goldman Sachs, lending the Wall Street investment bank a much-needed confidence boost just as its competitors were failing.
Perhaps its only vacant box on the checklist, Berkshire does not have a position in JPMorgan Chase (NYSE:$JPM), U.S’s largest bank by assets. However, Buffett personally owns shares of the bank himself. Buffett’s lieutenants also recently became members of JPMorgan Chase’s board of directors, as well as Todd Combs of Berkshire Hathaway, who became a director of the bank earlier this year.
One thing that we all are probably wondering is: “What’s with Buffet and banks?” Well, banking embodies similar dynamics and characteristics to insurance. Essentially, both sectors are in the business of managing risk, and success in both is determined by maintaining discipline through the volatility of the business cycle. This is something Buffett is known for.
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