Berkshire Asks to Expand Its Bank of America Stake
October 15 2019 - 9:02PM
Dow Jones News
By Nicole Friedman
Warren Buffett's Berkshire Hathaway Inc. requested permission
earlier this month from the Federal Reserve to increase its stake
in Bank of America Corp. above 10%.
Berkshire typically tries not to own more than 10% of a bank to
avoid additional Fed oversight. But the Omaha, Neb., conglomerate's
holdings grew to slightly more than 10% in July after the bank
repurchased shares.
The application underscores Mr. Buffett's positive outlook on
Bank of America and on the U.S. banking sector more broadly.
Berkshire held nearly $100 billion in financial-services stocks as
of June 30, and six of its 10 top stockholdings were financial
companies.
Berkshire said in its application that it might be interested in
buying more Bank of America stock in the future and that it plans
to continue being a passive investor in the bank.
"We have appreciated Berkshire's ownership for the past
seven-plus years, " Bank of America spokesman Lawrence Grayson
said.
Berkshire, whose application was earlier reported by Bloomberg,
didn't respond to a request for comment.
Also on Tuesday, Berkshire reported in a securities filing that
it sold off a small portion of its Bank of America shares last week
in connection with a previously planned sale of one of its
insurance companies.
In 2011, Berkshire bought preferred shares in Bank of America
and warrants to buy common stock, shoring up investor sentiment at
a time when the bank's health was in doubt. Berkshire exercised the
warrants in 2017 for a gain of about $13 billion and became Bank of
America's biggest shareholder.
Berkshire has previously received permission from the Fed to own
as much as 25% of American Express stock and has committed to
remain a passive investor in the company. Berkshire owned about 18%
of American Express as of June 30, according to FactSet.
However, Berkshire said in 2017 that it would sell Wells Fargo
shares as needed to keep its ownership below 10%.
The Fed proposed easing its restrictions on large bank investors
earlier this year.
--Nick Timiraos contributed to this article.
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
October 15, 2019 20:47 ET (00:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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