‘it’s what a value investor likes’

Shares of Citigroup Inc (NYSE: C) are up 8.0% this morning on reports the American business magnate, Warren Buffett, has taken a sizable stake in the Wall Street bank.

Buffett now has a 2.80% stake in Citigroup

According to the SEC filing, Buffett’s conglomerate holding company, Berkshire Hathaway, bought just over 55 million shares of the investment bank for $2.90 billion in the first quarter of 2022.

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The ‘Oracle of Omaha” now has a 2.80% stake in Citigroup that’s tanked nearly 35% in the stock market over the trailing twelve months. According to FactSet, it’s the only big bank that’s trading below its book value.

Interestingly, Buffett, in Q1, sold his remaining stake in Wells Fargo – a rival bank that’s been on his portfolio since late 1980s.

Jim Lebenthal’s remarks on the news

In April, Citigroup reported its financial results for the first quarter that handily topped Wall Street expectations. Discussing Buffett’s stake in Citigroup on CNBC’s “Halftime Report”, Jim Lebenthal – the chief equity strategist at Cerity Partners said:

Citi is a deep value stock. I look at it, I see the dividend yield. I see the cash flows that are supporting buybacks of shares well below the tangible book value. It’s what a value investor likes and I think this is Warren Buffett stepping up.

Other notable investments Berkshire made in the first quarter include a $2.60 billion stake in Paramount Global. It also slashed its position in Verizon Communications by more than 99% in Q1.