Last Friday, Berkshire Hathaway (NYSE: GS), Warren Buffett’s company, revealed that it had sold 84% of its position in Goldman Sachs (NYSE: GE).
Buffett’s move to sell a high-profile bank gained a lot of attention, given that the current economic forecasts are looking dire. Declines of as much as 42% are expected in the second quarter when the full force of the COVID-19 pandemic takes hold.
But with everything that Buffett does, context matters.
The Goldman Sachs sale is estimated to be worth US$2.5 billion, a sizable sum of money.
However, Berkshire Hathaway’s stock portfolio is worth close to US$200 billion.
Therefore, the sale of the high-profile bank amounted to no more than 1.5% of the company’s overall stock holdings.
Context matters
Goldman Sachs may be a revered name in the banking community, but it is hardly Buffett’s largest position in banks.
That title, according to CNBC’s Berkshire Hathaway Portfolio tracker, belongs to Bank of America (NYSE: BAC), which is currently worth close to US$22 billion, easily dwarfing its prior position in Goldman Sachs.
In fact, Berkshire Hathaway still owns US$8.8 billion in Wells Fargo (NYSE: WFC), US$5.2 billion in JP Morgan Chase (NYSE: JPM) and US$4.9 billion in US Bank Corp (NYSE: USB).
The quartet occupies over 20% of its overall portfolio, a position that is anything but small.
Unless that changes, it’s fair to say that Buffett is still very much invested in banks.
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Disclosure: Chin Hui Leong owns shares in Berkshire Hathaway and Amazon.
