Please ensure Javascript is enabled for purposes of website accessibility

Here's How Much Money Warren Buffett Has Made on Bank Stocks in 2021

By Bram Berkowitz - Updated May 21, 2021 at 5:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Most of the talk about Buffett and banking has focused on his selling of bank stocks, but the Oracle of Omaha made some good money on his bank holdings in the first quarter of the year. Here's what we know.

Legendary investor Warren Buffett and the company he runs, Berkshire Hathaway (BRK.A 0.02%) (BRK.B -0.00%), have spent much of the past year selling or trimming their bank stocks. But Berkshire has also been making a good amount of money on the ones it hasn't sold, as many bank stocks are now trading at all-time highs. Buffett spent years building up and maintaining some of these positions, and now he is reaping the rewards. Here's how much money Buffett and Berkshire have made on bank stocks in 2021.

Warren Buffett

Image source: The Motley Fool.

A great start to 2021

Before we get into the gains, I should note that Buffett and Berkshire over the last year has likely taken some losses or missed out on profits with some of his bank holdings. He sold most of his Goldman Sachs stake in the first quarter of 2020; most of his JPMorgan Chase stake in the third quarter of 2020; and he sold more than 323 million shares of Wells Fargo between the end of Q1 2020 and the end of Q1 2021. All three of these stocks are now trading much higher. However, it's difficult to know what those losses were because Berkshire's 13F filings, which reveal what stock moves the company made in each quarter, only tell us what Buffett and his team did in a specific quarter, not the date they bought or sold a stock or for what price, so it's hard to give specifics.

However, gains are much easier to figure out because 13Fs show us the value of certain holdings from one quarter to the next. Over the last year, Buffett added a lot to his Bank of America position and maintained his stakes in other banks through the difficult year. Through the first three months of 2021, banks got off to a tremendous start.

Bank

Berkshire Stake 12/31/2020 (thousands)

Berkshire Stake 3/31/2020 (thousands)
Bank of America (BAC -0.43%) $30,616,150 $39,080,793
American Express (AXP -0.28%) $18,331,249 $21,443,817
Bank of New York Mellon (BK -0.85%) $3,070,849 $3,421,785
U.S. Bancorp (USB 0.23%) $6,109,721 $7,172,993
Total $58,127,969 $71,119,388

Data source: Berkshire Hathaway 13F filings.

On the four main bank holdings left in its equity portfolio, Berkshire made close to $13 billion in the three months between the end of 2020 and March 31. Berkshire has also likely seen more gains in the second quarter, with all four of those stocks up higher from where they ended the first quarter.

While the pandemic sent the banking sector reeling early on, the industry will likely look back at the coronavirus as a major catalyst. Bank stocks had been doing better leading up to the pandemic, but were still suffering from some reputational issues from the Great Recession, which many investors still remember. Not only did the banking sector show much improved lending practices and loan quality during the pandemic, but it also played a major role in distributing funds from the Paycheck Protection Program. Both helped banks get into better standing with investors and the broader population in general.

Additionally, the pandemic has set the banking sector up for what could be a multiyear bull run. The pandemic showed banks and investors the benefits of being prepared for a more digital world. Furthermore, it showed banks that with the right investments in digital capabilities, they could rely less on bank branches and aim to run more efficiently going forward. Banks that had invested in the right digital capabilities were rewarded, while those that were behind realized they needed to do better and increase profitability or consider a sale.

The pandemic has also positioned banks for higher profitability in general. Trillions of deposits flooded into the banking system, many of which will ideally stick around; higher rates should increase profit margins on loans, and big economic growth should eventually benefit banks' balance sheets.

More gains to come

While I didn't agree with Buffett's decision to sell out of all of the banks that he did, I understand that with a $297 billion equity portfolio, he is looking at risk a bit differently than me, or the average investor. I also think he has picked a great lineup of banks that are poised to continue to rise long-term, whether it's Bank of America, whose strong sensitivity to interest rates will drive profitability much higher in a rising rate environment, or U.S. Bancorp, with its burgeoning payments business. While Berkshire's exposure to the banking sector is a good deal smaller than it was a year ago, I do expect the bank stocks the company has to continue bringing in profits.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short June 2021 $240 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$301.55 (-0.00%) $0.00
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$452,788.51 (0.02%) $91.26
American Express Company Stock Quote
American Express Company
AXP
$165.38 (-0.28%) $0.46
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$36.15 (-0.43%) $0.15
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$121.82 (-0.25%) $0.31
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$357.09 (0.92%) $3.27
Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$45.56 (-0.82%) $0.38
U.S. Bancorp Stock Quote
U.S. Bancorp
USB
$48.88 (0.23%) $0.11
The Bank of New York Mellon Corporation Stock Quote
The Bank of New York Mellon Corporation
BK
$44.52 (-0.85%) $0.38

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.