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.
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 email@example.com
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