> Warren Buffett Blog: Warren Buffett could increase his Wells Fargo Bank stake

Thursday, July 7, 2016

Warren Buffett could increase his Wells Fargo Bank stake

Wells Fargo stock has dropped almost 15 percent this year, as large U.S. banks get pummeled by low interest rates and volatility related to lackluster oil prices, slowing Chinese growth and Brexit. Warren Buffett has often advised investors to "Be Greedy when others are Fearful". 

Now Buffett is potentially going to increase his stake in Wells Fargo. Berkshire has put in a request for the Federal Reserve approval to expand its stake in the San Francisco based Wells Fargo bank beyond 10%. Wells Fargo is already one of Buffett's four biggest equity holdings, and thanks to the bank's buybacks, his stake grew to 10% earlier this year, according to a March regulatory filing.

The requirement that investors seek Federal Reserve permission to to hold more than 10% of a financial institution is a provision of the Change in Bank Control Act, which is used by regulators to monitor activity between banks and non-financial institutions, and prevent acquisitions that might be harmful to customers or the general public.

"Berkshire is seeking permission to retain its current ownership position in Wells Fargo and to acquire additional shares of common stock of Wells Fargo," the Omaha, Neb.-based company said in an application to the Fed. "Berkshire does not have any specific transaction or dollar value in mind. And Berkshire does not have any present intention to acquire additional shares of common stock of Wells Fargo," according to the filing. The company said it nonetheless "routinely assesses market conditions and may decide to purchase additional shares," depending on the potential gain from such an investment.

Berkshire's application said that the company hasn't purchased stock in Wells Fargo since Oct. 21 and that it has no plans or proposals to merge, liquidate, or sell any portion of the bank or change its business strategy or corporate structure.