Berkshire Hathaway Dumps Banking Stocks in Q1, Sells All Shares of Crypto-Linked Nu Holdings, Citigroup

Billionaire investor Warren Buffett's Berkshire Hathaway heavily sold banking shares in Q1, according to a 13f filing with the US Securities and Exchange Commission.

The Oracle of Omaha sold all shares of Brazilian bank Nu Holdings, which has its own crypto platform. He disposed of 40.18 million shares of the bank during the quarter that ended 31st March, valued at £396 million ($527 million), based on the closing price of £9.87 ($13.13) on 15th May.

Berkshire Hathaway had invested £375.74 million ($500 million) in Nu Holdings's 2021 Series G funding round, followed by an additional £187.87 million ($250 million) capital injection. However, Buffett's latest move might indicate that he stands firm in his stance on cryptocurrencies and related services, having previously described Bitcoin as 'rat poison squared.'

A year after Berkshire invested in Nu Holdings, the company launched its Nubank Cripto platform to support crypto transactions and digital token conversion. Although Bitcoin continued its record rallies in recent years, Buffett continued expressing his disdain for cryptocurrencies and predicted a 'bad ending' for digital tokens.

Buffett Offloads Citigroup Stake

According to the regulatory filing, Buffett sold his entire stake of 14.64 million shares in Citigroup during the quarter, which would be valued at £841.66 million ($1.12 billion) based on the closing price of £57.08 ($75.96) per share on 15th May.

Citigroup has been facing major operations and regulatory hurdles this decade, including costly accounting errors and millions of dollars in fines. The bank has reportedly been involved in multiple compliance failures in the past 12 years, translating to £1.12 billion ($1.5 billion) in penalties paid to US regulators.

The bank has also faced criticism for its fragmented IT infrastructure and inadequate employee training, reflected in an erroneous credit of £60.87 trillion ($81 trillion) instead of £210 ($280) to a customer account, which took several hours to reverse. Under CEO Jane Fraser's leadership, the bank plans to reduce IT contractors by 30% and add 2,000 full-time tech jobs this year.

More recently, a three-judge panel of the 11th US Circuit Court of Appeals in Miami said yesterday that Citi must face a revived lawsuit alleging it was involved in fraud at the now-bankrupt Mexican oil and gas services company Oceanografia that led to losses of over £751.48 million ($1 billion).

Berkshire Hathaway Sells Over 48M BofA Shares

The 13f filing shows that Berkshire Hathaway also trimmed its stake in Bank of America by 7.15% or 48.66 million shares, worth £1.61 billion ($2.15 billion) based on the closing price of £33.35 ($44.38) per share on 15th May.

Buffett's company still holds 631.57 million shares of the bank worth £18.80 billion ($26.36 billion. BofA has also been facing regulatory challenges as well as system glitches and widespread outages in recent years. There were times when account holders were shocked to see account balance as $0 while in other cases, many clients were unable to access their accounts.

Late last year, the bank also agreed to implement remedial action as part of a settlement with the Office of the Comptroller of the Currency, which highlighted issues in its sanctions compliance and suspicious activity monitoring systems.

It appears Buffett is steering away from companies facing prolonged systemic and regulatory challenges, regardless of their fortress-like balance sheets. His latest moves could be viewed as a way to mitigate portfolio risks in volatile markets.

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