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Warren Buffett's Favorite Bank Stock

By Matthew Frankel, CFP® and Jason Hall - May 2, 2021 at 6:33AM

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Banking is one of Buffett's favorite industries, but he's betting a lot on one bank stock in particular.

Bank stocks have been a favorite of Warren Buffett for some time, and as of the latest available information, there are six different banks in Berkshire Hathaway's (BRK.A 0.07%) (BRK.B -0.01%) stock portfolio. But one of Berkshire's bank investments is larger than the other five combined. In this Fool Live video clip, recorded on April 20, Fool.com contributors Matt Frankel, CFP, and Jason Hall and chief growth officer Anand Chokkavelu discuss Berkshire's largest bank stock and how Buffett's bank investments have evolved over the years. 

Anand Chokkavelu: Let's go to the most important bank opinion. Matt, can you share with us what is Warren Buffett's current favorite? For folks who followed him a few years ago, that bank has changed.

Matt Frankel: He is never really owned Citigroup (C -0.99%), I don't think, but he sold shares of Goldman Sachs (GS -1.16%), Wells Fargo (WFC -1.50%), and JPMorgan Chase (JPM -0.65%) recently to buy more Bank of America. However, Berkshire Hathaway owns a little over 10% of Bank of America (BAC -0.83%) right now. It's a big investment. I will say that there is a difference between what is his favorite investment and his favorite bank. We know he's a big fan of Jamie Dimon, for example the healthcare joint venture together with Amazon, he's a big fan of Jamie Dimon, He is a big fan of Wells Fargo's business. I just don't know if he believes in them as an investment right now, I think he feels really burned by them and misled. But Bank of America, it's really tough to make the case that he likes any bank stock other than Bank of America right now.

Chokkavelu: Remember during the financial crisis, Buffett said something along the line, this is when Wells Fargo was trading at, I think it was just under $10 a share. I think he said something to the effect of if he had to put his entire net wealth in to something, it would be Wells Fargo at that price. Things have changed a little. We'll go to, next one is I'd like to call cultiest leader. Who's got that cult of personality? I think I know who you guys are going to say, but I will have a Dark Horse candidates there.

Frankel: Yeah, the obvious answer is Jamie Dimon. I have to say [Bank of America CEO] Brian Moynihan is probably my favorite. Aside from reading Jamie Dimon shareholder letters, I'd say Brian Moynihan is probably my favorite to listen to.

Jason Hall: I would say within the banking sector, people that follow banks and that follow the sector close and invest in financials, Moynihan might be even a little more culty because what he's done there. Jamie Dimon has done incredible things and has built the biggest bank in the U.S. but Moynihan took an absolute wreck, with tens of billions of dollars and liabilities, and his turned it into an incredibly well-run organization. The people that your average consumer doesn't even associated as all this is a bad bank, and you go back eight years ago, and this had a terrible reputation, ruin people's lives. You think about it's coming out of the global financial crisis and some of their lending activities, and some of their companies they bought, I would say Moynihan might get the tip for me for in the know people, right?

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Stocks Mentioned

Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$30.98 (-0.83%) $0.26
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$414,148.01 (0.07%) $303.91
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$275.65 (-0.01%) $0.04
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$293.76 (-1.16%) $-3.44
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$46.15 (-0.99%) $0.46
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$111.89 (-0.65%) $0.73
Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$39.50 (-1.50%) $0.60
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$114.33 (0.73%) $0.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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