The banking crisis is costing most S&P 500 investors serious money. Even Warren Buffett is taking his lumps.
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Berkshire Hathaway ,BRKBAn analysis of data from S&P Global Market Intelligence and Investors Business Daily said 15 of its worst-performing US-listed stocks are losing $12.6 billion this year based on the dollar value of existing holdings. marketsmith, And now the sector giving him trouble? financial choice Bank of America ,BAC, associate financial ,Associate, Bank of New York Mellon ,bk) And US Bancorp ,USB,
Buffett’s long-standing interest in the financial sector is now costing him dearly. Six of their 15 worst performers this year, by a dollar amount, are in the financial sector. Bespoke Investment Group says the market value of banks around the world has fallen by more than $500 billion in the past week and a half. And Berkshire Hathaway is a sizeable owner of some of them.
“From March 6 to March 15, the total market cap (of banks) fell 11.4%,” Bespoke said. “For that period, only during the global financial crisis in 2008, the debt ceiling chaos of 2011, the floating of the Chinese yuan in 2015, and the Covid shock have seen larger declines. In short, this is a historic decline in the market. The value of the banks may be far from unprecedented.”
Bank of America Is Buffett’s No. 1 Loser
Buffett’s commitment to Bank of America stock is now costing him dearly. How much? Just over $4 billion this year.
The stock, which Berkshire Hathaway has gained steadily since 2017, is down 12.8% this year. That’s not the biggest percentage decline in Berkshire Hathaway’s portfolio of nearly 50 US-listed stocks. Liberty SiriusXM ,lsxmk, But Bank of America is the costliest loser because Berkshire Hathaway is such a large owner. The current position is valued at $4.3 billion less this year.
Keep in mind that Buffett is now the No. 1 owner of BofA stock. Berkshire Hathaway owns 12.6% of the bank, outpacing even ETF giant Vanguard with a 7.6% stake. The only stock Berkshire Hathaway is down almost as much as Bank of America is in the dollar purlin ,cvx, Berkshire Hathaway is also the top holder of the oil giant with an 8.8% stake. Falling oil prices drove Chevron’s 14.1% decline in value this year.
Other S&P 500 Financials Hurting Buffett
Other bank holdings are affecting Berkshire Hathaway as well. Berkshire Hathaway still owns about 10% of Ally Financial, a bank with a large auto loan business. Shares are down 4.4%, wiping out $31 million in value this year.
However, Berkshire Hathaway incidentally has reduced its holdings in some of the banks. Those moves are now paying off. Buffett’s holding company now owns just less than 1% of US Bancorp, one of many dogs it’s unloading. Berkshire Hathaway started selling shares of the bank in the middle of last year and plans to sell almost all of the shares by the end of 2022. It’s a good thing. Shares have declined about 17% this year, wiping out about $48 million from Berkshire Hathaway’s short balance position.
Similarly, Berkshire Hathaway now only holds a 3.1% stake in Bank of New York Mellon. Berkshire Hathaway has been reducing its position in the bank since 2018. That means it only has a $28.5 million position on the stock, down 2.5% on the year. Bank of New York Mellon is known as one of the banks with the highest percentage of uninsured deposits.
It is not easy for banks to stock up after this crisis unfolds. Bespoke says, “While not exaggerating, only a few other incidents have seen major declines.”
Buffett’s biggest dollar-value loss this year
Based on current conditions of Berkshire Hathaway
| company | Sign | Area | Year-to-date % f. | Berkshire loss ($ billions) |
|---|---|---|---|---|
| Bank of America | ,BAC, | financial situation | -12.8% | $4.3 |
| purlin | ,cvx, | energy | -14.1% | 4.2 |
| Coca-Cola | ,To, | consumer staples | -5.2% | 1.3 |
| kraft heinz | ,KHC, | consumer staples | -6.3% | 0.8 |
| Occidental Petroleum | ,oxy, | energy | -6.4% | 0.8 |
| Liberty SiriusXM | ,lsxmk, | communication services | -31.9% | 0.5 |
| verisign | ,VRSN, | information technology | -5.3% | 0.1 |
| McKesson | ,mck, | Health care | -9.4% | 0.1 |
| Globe Life | ,GL, | financial situation | -9.9% | 0.07 |
| US Bancorp | ,USB, | financial situation | -16.5% | 0.05 |
| RH | ,RH, | consumer discretionary | -7.5% | 0.05 |
| Markel | ,mkl, | financial situation | -5.8% | 0.03 |
| associate financial | ,Associate, | financial situation | -4.4% | 0.03 |
| snowflake | ,Ice, | information technology | -3.4% | 0.03 |
| Bank of New York Mellon | ,bk, | financial situation | -2.5% | 0.03 |
Source: IBD, S&P Global Market Intelligence based on current holdings
Follow Matt Krantz on Twitter @mattkrantz
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