Topline
Berkshire Hathaway chairman Warren Buffett threw cold water on regional bank stocks’ recent rebound during the storied conglomerate’s annual meeting this weekend, offering a subpar outlook for the beaten-down industry.
Warren Buffett at Berskshire Hathaway’s annual meeting in Omaha.
Key Facts
“We don’t know where the shareholders…of the regional banks are headed,” Buffett said Saturday, a nod to the fate of equity stakeholders of publicly traded Silicon Valley Bank, First Republic and Signature Bank who saw their positions essentially become worthless after the institutions failed earlier this year.
Buffett’s comments did little to dissuade investors from pouring back into the still-alive but badly maimed regional bank stocks; PacWest (up 9% Monday) and First Citizens (up 7%) led a broader recovery for the group.
Berkshire Hathaway is “very cautious” about making investments in banks big or small, Buffett added, citing a lack of understanding among the American public and lawmakers alike about the turbulent situation, which saw flocks of panicked consumers cashing out of regional banks after a handful of seemingly isolated collapses.
Contra
Despite his short-term cautiousness, Buffett on Saturday said “banks can be a perfectly good investment.” Berkshire Hathaway has a nearly $28.8 billion stake in Bank of America and smaller stakes in Ally Financial, Bank of New York Mellon, Citi and U.S. Bancorp, according to a December regulatory filing.
Crucial Quote
This weekend marked the “best” annual meeting for Berkshire Hathaway in “several years,” says UBS analyst Brian Meredith, pointing to strong progress in the company’s Geico insurance business and the plan for succession after Buffett.
Forbes Valuation
We estimate Buffett’s net worth to be $112.8 billion, the sixth-largest fortune in the world.
Tangent
Berkshire Hathaway’s portfolio has enjoyed a solid rally year-to-date thanks to a 39% gain in Apple, by far its largest holding, accounting for roughly half of the holding firm’s stock portfolio. Apple, which beat analysts’ estimates for profits and sales in its Thursday earnings report, surged almost 5% in Friday trading, tacking on some $122 billion in market cap.
Further Reading
Highlights From Warren Buffett And Berkshire Hathaway’s 2023 Annual Meeting (Forbes)
Dow Jumps 500 Points As Apple Surges And Bank Stocks Rally—But Risk Of Market Accident Lingers (Forbes)
Not Just PacWest: These Regional Bank Stocks Plummet Amid Contagion Fears (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2023/05/08/buffett-warns-berkshire-remains-very-cautious-on-bank-stocks-even-as-pacwest-and-other-regionals-rally/