Buffett’s Berkshire Hathaway increases stake in Wells Fargo

03/03/2014 6:31 PM

03/03/2014 6:32 PM

Warren Buffett’s Berkshire Hathaway has upped its stake in Wells Fargo, boosting its ownership in the San Francisco lender to 9.2 percent.

The chairman of the Omaha, Neb.-based investment company made the disclosure in his annual letter to shareholders over the weekend. Berkshire Hathaway was already the largest shareholder in Wells Fargo before it increased its investment, which stood at 8.7 percent at the end of 2012.

Wells Fargo is one of Berkshire Hathaway’s “Big Four” investments. Last year, Berkshire Hathaway also increased its investment in the other three companies in the group: American Express, Coca-Cola and IBM.

As of the end of 2013, Berkshire Hathaway’s stake in Wells Fargo totaled 483.4 million shares and was worth almost $22 billion.

Buffett’s letter also mentions Berkshire Hathaway’s investment in Bank of America, calling it “one we value highly.”

Bank of America is the company’s fifth-largest stock investment, the letter says. In 2011, Berkshire Hathaway invested $5 billion in Bank of America, shoring up the Charlotte-based lender at a time when its stock had fallen to around $6 a share.

At the time, Berkshire Hathaway bought $5 billion in preferred shares and rights to buy 700 million common shares at $7.14 per share. Those rights expire in September 2021.

“At year end these shares were worth $10.9 billion,” Buffett said in his latest letter to shareholders. “We are likely to purchase the shares just before expiration of our option.”

Last month, Bank of America said it has reached a deal with Berkshire Hathaway to count preferred shares valued at $2.9 billion as so-called Tier 1 capital, which measures how well a bank can absorb losses. Regulators closely watch banks’ capital levels to evaluate their health.

The plan needs approval from the bank’s shareholders in May.

Bank of America meets regulatory capital requirements already. The bank ended 2013 with $132 billion in Tier 1 common capital. Its 10 percent Tier 1 ratio exceeded the 8.5 percent minimum regulators will require in 2019.

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