Blog Archives

In recent years, Warren Buffett has had an incredible appetite for buying shares of the San Francisco-based bank Wells Fargo. It is now the biggest public investment in the Berkshire Hathaway portfolio.

Wells Fargo recently pushed aside the long-standing Coca-Cola, which Berkshire Hathaway began purchasing in late 1987, and finally stopped in 1995. He believed that the true value of Coca-Cola will was not reflected in the share price at the time. Considering the fact that Coke remained the largest holding for Berkshire Hathaway for many years lets us know how well it performed for Buffett and company.

Warren Buffett has been adding to his will far goes holdings for quite a few years. The consistent purchases has prompted it to become Berkshire Hathaway’s largest holding.

Berkshire Hathaway’s last regulatory filing shows us that they added another 17.3 million shares of Wells Fargo during the last quarter. That brings the total holding to 439.8 million shares. Warren Buffett has been the largest shareholder of Wells Fargo for quite some time.

Berkshire Hathaway stake in Wells Fargo is roughly worth around $15.5 billion. The Coca-Cola stake is currently valued at $14.7 billion.

There is no question that Warren Buffett is going to spend some of his time writing about Wells Fargo in the upcoming letter to Berkshire Hathaway shareholders. The letter will be distributed after the market closes on March 1.

Warren Buffett has talked about Wells Fargo being his favorite bank in the past, and regularly mentions the banks low cost of funding. This is a powerful business advantage when the lending money. The chairman and CEO of Wells Fargo, John Strumpf, says he begins his day by reviewing the deposit figures of the bank.

Wells Fargo is currently the fourth largest bank in the United States according to assets. They recently had to relinquish their title of being the most valuable bank back to J.P. Morgan Chase.

Many people still believe that Wells Fargo will eventually be the largest bank in the United States one day.

They made a large step in that direction during 2008 when they purchased walkover you. There were a lot of mortgage woes when they made this deal, but the deal also turned Wells Fargo into a true national bank.

It was surprising to read that an analyst criticized the walkover you purchase as one of Wells Fargo’s recent mistakes. I wouldn’t be surprised if Buffett decides to pick up another few million shares because of the news.

Billionaire investor and chairman of Berkshire Hathaway Inc., Warren Buffett, stated that Wells Fargo will receive a nice payoff as the housing market bounces back in the United States, due to their dominance in this particular marketplace.

“They’ve got a sensational mortgage operation,” Warren Buffett said while on the Bloomberg television program “In the Loop With Betty Liu”. This sound bite was part of an interview that Buffett gave during the Allen & Co. conference that took place in Sun Valley, Idaho.

He also stated that “The total mortgage market was at the $3 trillion level not that long ago. If it goes back up to $3 trillion, I hope Wells is doing a third of those.”

Wells Fargo, whose largest shareholder is Berkshire Hathaway, actually created one out of three mortgages in the first quarter of 2012. They also have plans to boost their market share by up to 40%. They even claim that the number of mortgage applications they’ve received has set a new quarterly high, and this is during the last three most recent months.

More borrowers are appearing because of the record low interest rates that are attracting them, and this is especially true for those individuals looking for refinancing. Wells Fargo has been capitalizing on this business because some of their major competitors, such as the Bank of America Corp., have been pulling back. Which is leaving the market wide open for them.

On average, a 30 year fixed rate mortgage has dropped to a relatively low 3.56% during the week which ends on July 12. This number is down over a half a percent since March, when the average interest rate was about 4.08%. This information is supplied according to Freddie Mac. The interest rate is actually the lowest the company has seen based on their records dating back to the year 1971.

The reason why Wells Fargo was able to capitalize on all of these mortgages being created right now is because they navigated the housing crisis quite successfully, according to Warren Buffett. They originated 33.9% of all home loans in the United States in the first quarter, which is more than triple the amount of one of their biggest competitors J.P. Morgan Chase and Company, who only originated 10.6% of those loans. This information is provided according to Inside Mortgage Finance, which is a trade publication.

Have Wells Fargo’s Rivals Faded?

“Wells did the best job of the big players in the mortgage market and therefore they’ve garnered a share as the other fellows have fallen by the wayside,” stated the 81-year-old Warren Buffett, whose investment firm Berkshire Hathaway owns over 7% of Wells Fargo’s common stock. This information was obtained through data provided by Bloomberg.

John Stumpf, 58-year-old CEO of Wells Fargo, picked up $208 billion in mortgage applications during the second quarter of 2012. They were able to successfully complete $131 billion in mortgage originations. The unclosed loans pipeline stood at $102 billion at the end of the month of June.

Warren Buffett has recently added onto his Wells Fargo investment, because he believes that there will be a housing market recovery and Wells Fargo will reap those rewards. He’s also recently bought a brickmaker, and with Leucadia National Corp., he also expanded the real estate brokerage of Berkshire Hathaway and has bet on more commercial property through this collaboration.