Is Wells Fargo Slowly Becoming Warren Buffett’s Largest Outside Investment?

It’s no secret that Warren Buffett is really enthusiastic about Wells Fargo Bank. He just purchased another 11 million shares of the company in the third quarter.

As of the third quarter this year, Berkshire Hathaway now owns 422.5 million shares of Wells Fargo, which we learned from an SEC filing this week.

At the time of this writing, the 400 million shares of Coca-Cola owned by Berkshire Hathaway currently account for 20.1% of the Omaha Nebraska company’s investment portfolio. Wells Fargo is currently at 19.4% of the total Berkshire portfolio, which we learned from Forbes. International Business Machines, better known as IBM, is a close third, with shares numbering 18.6% of the entire portfolio.

Since our current economic troubles began, Warren Buffett has consistently added to his stake in Wells Fargo. He initiated this position during the early 1990s when we were undergoing the commercial real estate crisis.

During an interview with CNBC last week, Buffett mentioned that he will continue buying shares in Wells Fargo, and described it as his overall favorite bank.

“In the last week, I bought some Wells Fargo,” mentions Buffett to CNBC on the 24th of October. “We only have some 430 million shares. I didn’t feel we had enough.”

By continuing to purchase more and more shares of Wells Fargo, Warren Buffett is showing us consistently that he feels the banks outlook is very bright. He has always admired their competitive advantage in low cost of funds throughout the business of borrowing money at a lesser rate, and then lending it at a higher rate. This advantage should become even more lucrative as interest rates move higher.

To add some contrast to Warren Buffett’s hungry appetite for shares in Wells Fargo, he hasn’t added shares of Coca-Cola to his portfolio since the year 1994. That’s why it’s fairly safe to say that Wells Fargo will eventually become Berkshire Hathaway’s largest holding in relation to publicly traded companies in their portfolio.

It’s exciting to hear what Warren Buffett will have to say it the annual meeting next May. You know he will have plenty to share about his favorite bank Wells Fargo.

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