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3 Financial Stocks Buffett Recently Trimmed

By Bram Berkowitz – Nov 18, 2021 at 7:45AM

Key Points

  • Berkshire cut roughly 4% of its stake in the payment processor, Visa.
  • Berkshire also trimmed its stake in Mastercard, Visa's rival, by about 6%.
  • Lastly, Buffett and Berkshire sold about 2% of their position in U.S. Bancorp.

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Warren Buffett and his company Berkshire Hathaway continued to cut their positions in several financial stocks.

Legendary investor Warren Buffett and his company Berkshire Hathaway (BRK.A 0.05%) (BRK.B -0.03%) recently reported their 13F filing, which shows what stocks Buffett and Berkshire were buying and selling during the third quarter of the year. Investors are always excited to get a peek inside the brilliant minds of Buffett and other stock pickers at Berkshire, given how much success both have had in the world of investing.

One noticeable finding from the quarter is that Buffett continued to sell financials -- a trend that began during the pandemic and appears to be occurring still. Here are three financial stocks Buffett sold in Q3.

1. Visa

Berkshire trimmed its stake in the payment processor Visa (V -0.30%) by about 4.2%, selling roughly 425,000 shares in Q3. Visa seemed to benefit from the pandemic, which greatly accelerated the use of digital payments worldwide. Visa's stock hit all-time highs this year, reaching nearly $250 per share in July. But since then, shares have been trending downward and recently traded around $215 per share, not too much higher than they were prior to the pandemic.

Following a beat in Q3 earnings, shares of Visa fell after management guided for revenue growth in the mid-teens, which disappointed analysts who had been projecting 20% revenue growth next year. Still, Visa has set up one of the largest payment rails in the world, and with payments getting more digital every day, the company still looks to be well-positioned. Also, though Berkshire trimmed its stake, there's no indication yet that the conglomerate plans to eliminate it entirely.

Warren Buffett smiling.

Image source: Motley Fool

2. Mastercard

Perhaps not a huge surprise, considering how similar these businesses are, Berkshire also trimmed its stake in Visa's closest competitor Mastercard (MA -0.25%). In Q3, Buffett and Berkshire sold 276,000 shares, roughly 6% of their stake, in Mastercard. Visa and Mastercard have traded with fairly similar action since the pandemic began, although Mastercard appears to be on more of an upswing right now.

V Chart

Data source: YCharts.

What might explain the recent diversion is that while Mastercard has recently been rolling out new initiatives in the crypto and buy-now-pay-later spaces, the Department of Justice (DOJ) has been investigating Visa's ties to big fintech companies. The probe follows a DOJ investigation that began last year and, ultimately, shut down Visa's planned acquisition of Plaid, so investors may not be taking the DOJ lightly.

3. U.S. Bancorp

U.S. Bancorp (USB -0.71%) had appeared to be Buffett's regional bank pick after he eliminated Berkshire's stake in other regional banks PNC Financial Services Group (PNC -1.45%) and M&T Bank Corporation (MTB -0.78%) during the pandemic.

But Berkshire has now trimmed its stake in U.S. Bancorp for several quarters in a row, although by small amounts. In Q3, Buffett sold nearly 2.5 million shares, nearly 2%, of his stake in U.S. Bancorp. I assume that Berkshire has been doing this because, like most large banks, U.S. Bancorp has been buying back stock in recent quarters. So, Buffett may simply want to maintain his current stake in the company and not see it increase.

At the end of Q3, Berkshire owned 8.5% of U.S. Bancorp's outstanding common shares. If Berkshire's stake climbs above 10% of outstanding common shares, there would be additional regulatory reporting requirements. If you look back at the end of 2019, Berkshire owned nearly 132.5 million shares of U.S. Bancorp, equivalent to about 8.6% of outstanding U.S. Bancorp common shares at the time.

So, despite Berkshire selling more than six million shares of U.S. Bancorp since the end of 2019, the conglomerate still owns roughly the same percentage of the bank. Ultimately, I think Buffett still likes the stock and that U.S. Bancorp's stock is still well-positioned. Buffett and Berkshire are likely right-sizing their position.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Mastercard, and Visa. 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 January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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