Warren Buffett sticks with Bank of America as crisis rocks banking stocks

Finance


Warren Buffett admitted at Saturday’s Berkshire Hathaway (BRK-A, BRK-B) annual meeting that he is unsure of the next move for bank stocks.

But he especially likes a long-term crisis or crisis-free bank – Bank of America (BAC).

Buffett said at a shareholder meeting in Omaha, Nebraska, “I’m very cautious about bank ownership and I’m sticking with one bank… I like Bank of America and the management I like it,” he said.

Buffett has a long history at Bank of America.

The “Oracle of Omaha” injected $5 billion into Bank of America in 2011. This was not only a bet on Bank of America’s leadership position, but also in the steady hand of CEO Brian Moynihan.

Investor Warren Buffett (left) and Bank of America CEO Brian Moynihan at the Bank of America and Global Social Enterprise Initiative (GSEI) at Georgetown University McDonough School of Management in Washington State speaks to students at Georgetown University on September 19, 2013, at an event co-sponsored by .  REUTERS/James Lawler Duggan (United States - Tag: Business)

Investor Warren Buffett (left) and Bank of America CEO Bryan at an event co-hosted by Bank of America and the Global Social Enterprise Initiative (GSEI) at McDonough Business School in Georgetown, Washington, September 19, 2013 Reuters/James Lawler-Duggan as Moynihan speaks to students at Georgetown University

Moynihan remains CEO of BofA, overseeing the impressive growth of the systemically important bank. Shares have risen about 185% since the 2011 deal with Berkshire.

Buffett currently owns 13% of Bank of America.

The vote of confidence in BofA comes against the backdrop of a headline-grabbing bank failure. And Buffett has sold tens of billions of dollars worth of bank stocks over the past few years.

Regulators seized local bank First Republic on Monday, selling most of the bank’s operations to JPMorgan Chase (JPM). This marks the largest bank failure since the 2008 financial crisis.

Regional bank PacWest (PACW) is now eyeing investors for possible bankruptcy.

The crisis began in March with the failures of Silicon Valley Bank, Signature and Credit Suisse.

Year-to-date, the KBW Banks Index is down 25%.

“I don’t know where the bank shareholders are going,” Buffett said, pointing out bad bank shareholders should be wiped out.

“There are all kinds of new inventions in banking, but we need old values,” added Buffett.

Brian Sotzi Editor-in-chief of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and LinkedInAny tips on deals, mergers, activist situations, etc? Email brian.sozzi@yahoofinance.com

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