According to the Aggregated Portfolio of Gurus, a Premium feature of GuruFocus, three stocks that Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) and Charlie Munger (Trades, Portfolio)’s Daily Journal Corp. (DJCO, Financial) both own are Bank of America Corp. (BAC, Financial), Wells Fargo & Co. (WFC, Financial) and U.S. Bancorp (USB, Financial).
Guru background
Known as the “Oracle of Omaha,” Buffett studied under the legendary Benjamin Graham at Columbia University and built Berkshire from a textile company into a major insurance conglomerate.
Prior to serving as Buffett’s vice chairman, Munger studied mathematics at University of Michigan and law at Harvard. Munger introduced the concept of “Elementary, Worldly Wisdom” as it relates to business and finance. Munger inspired Buffett to follow Berkshire’s current four-criterion approach to invest in “good companies at fair prices.”
While Munger is known as vice chairman of Berkshire, the investing titan is also chairman of Los Angeles-based Daily Journal. GuruFocus’ Aggregated Portfolio shows that Berkshire and Daily Journal have three stocks in common, including major banks like Bank of America and Wells Fargo.
Bank of America
Berkshire and Daily Journal have a combined weight of 57.56% in Bank of America (BAC, Financial).
Shares of the Charlotte, North Carolina-based bank surged more than 3% on Thursday on the back of reporting third-quarter earnings results that topped consensus estimates. Bank of America reported net earnings of 85 cents per share on revenue of $22.87 billion, topping the Refinitiv estimate of earnings of 71 cents per share on revenue of $21.80 billion.
GuruFocus ranks Bank of America’s financial strength 3 out of 10 on the back of cash-to-debt and debt-to-equity ratios that are underperforming more than 67% of global competitors.
Other gurus with holdings in Bank of America include Dodge & Cox, PRIMECAP Management (Trades, Portfolio) and Pioneer Investments.
Wells Fargo
Berkshire and Daily Journal have a combined holding of 32.81% in Wells Fargo (WFC, Financial).
GuruFocus ranks the San Francisco-based bank’s financial strength 3 out of 10 on the back of debt ratios underperforming more than 64% of global competitors.
GuruFocus Premium members can compare financial strength metrics using the website’s new Stock Comparison Table. Figure 1 illustrates a sample “Financial Strength and Valuation” table for Wells Fargo and Bank of America.
Figure 1
As Figure 1 illustrates, Wells Fargo is less overvalued than Bank of America is based on the GF Value and has slightly better leverage ratios. Wells Fargo’s cash-to-debt ratio of 1.43 outperforms Bank of America’s cash-to-debt ratio of 0.90.
Shares of Wells Fargo traded around $45.22, showing the stock is fairly valued based on Thursday’s price-to-GF-Value ratio of 0.99.
While shares of Bank of America also traded around $45, shares are significantly overvalued based on Thursday’s price-to-GF Value ratio of 1.38.
U.S. Bancorp
Berkshire and Daily Journal have a combined weight of 6.20% in U.S. Bancorp (USB, Financial).
GuruFocus ranks the Minneapolis-based bank’s profitability 6 out of 10 on the back of a high Piotroski F-score of 8 and a 4.5-star business predictability rank despite three-year earnings growth rates underperforming more than 66% of global competitors.
