After a big buying spree of Bank of America (NYSE:BAC) in July, many investors and analysts speculated that it might be a sign Warren Buffett had been increasing his position in many of his bank holdings, maybe even buying low during the market's recovery in the second quarter.
But he didn't.
Berkshire Hathaway's (NYSE:BRK.A) (NYSE:BRK.B) quarterly 13F filing, released after Friday's close, showed that from April 1 to June 30, Buffett and his team reduced their position in most of their bank holdings, including reductions in onetime favorites JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC). While it's still possible they've done more buying here in the third quarter, they did the exact opposite in the second, not increasing their position in any banks or other financial companies.
The banking sector has lagged the general market as banks and investors have tried to wrestle with the extent of loan losses they will see from the coronavirus pandemic, as well as how long the pandemic will last.
Berkshire reduced its position in JPMorgan from 57.7 million shares as of March 31 to about 22.2 million shares as of June 30, representing a nearly 62% reduction in the company's position. Berkshire also reduced its holdings of Wells Fargo from more than 323 million shares to roughly 238 million shares, a more than 26% reduction.
The reduction in Wells Fargo is perhaps not as surprising, considering Buffett has been publicly critical of the company after its phony-accounts scandal. The company also performed dismally in the second quarter, reporting a $2.4 billion loss and slashing its dividend.
But the huge reduction in JPMorgan is a bit of a shock, especially after America's largest bank reported a $4.7 billion profit in the second quarter, driven by record revenue and after setting aside close to $10.5 billion in the quarter to cover potential loan losses.
Berkshire also reduced its position in Bank of New York Mellon by roughly 9%, and didn't seem to like regional banks either.
The company very slightly reduced its position U.S. Bancorp, but then cut its stake in M&T Bank by 16.4% and PNC Financial Services Group by nearly 42%, after increasing its position in the Pittsburgh-based regional bank in the first quarter of the year.
Berkshire and Buffett also now have completely eliminated their position in Goldman Sachs, after dumping most of their stake in the first quarter.
Even with the rapid acceleration of digital payment trends, Berkshire reduced its position in Visa by 5.4% and in Mastercard by 7.4%.
Of its other financials holdings, Berkshire maintained its positions in American Express, Globe Life, Moody's, StoneCo, and Synchrony Financial.
The quarterly report came after Berkshire increased its position in Bank of America in July several times from 925 million shares to 1.03 billion shares, now accounting for 11.9% of Bank of America's outstanding shares. The company was required to disclose these buys in July because it owns more than 10% of outstanding shares.
Interestingly though, Berkshire did all of this buying after Bank of America reported earnings in July, so it's very possible that even now Buffett has a more favorable view of the banking sector, although the second-quarter 13F certainly does not indicate that.