As investors monitor bank earnings and the possibility for larger interest rate hikes, five bank stocks in Warren Buffett (Trades, Portfolio)’s first-quarter 13F equity portfolio that are trading near 52-week lows are Citigroup Inc. (C, Financial), Bank of America Corp. (BAC, Financial), Bank of New York Mellon Corp. (BK, Financial), U.S. Bancorp (USB, Financial) and Ally Financial Inc. (ALLY, Financial).
Dow tumbles as investors ponder larger rate hikes
On Thursday, the Dow Jones Industrial Average closed at 30,630.17, down 142.62 points from Wednesday’s close of 30,772.79. Despite this, the markets were down 628.86 points at the intraday low on the back of poor earnings from big banks like JPMorgan Chase & Co. (JPM, Financial) and Morgan Stanley (MS, Financial).
Investors also started pondering about larger interest rate hikes: Fed Governor Christopher Waller said in an economic summit event in Victor, Idaho, that while he supports another 0.75% interest rate hike at the Federal Open Market Committee meeting from July 26-27, his base case depends on other, incoming economic data. Waller added that if said data comes in “materially stronger than expected,” he is open to a larger rate hike.
Berkshire first-quarter 13F equity portfolio overview
The “Oracle of Omaha” seeks to invest in good companies at fair prices, focusing on companies with understandable businesses, favorable long-term growth prospects, shareholder-oriented management and attractive valuations. As of March, Berkshire Hathaway’s (BRK.A, Financial)(BRK.B, Financial) $363.55 billion 13F equity portfolio contains 49 stocks with a quarterly turnover ratio of 12%. The equity portfolio contains a 27.19% weight in financial services, second only to a 45.03% weight in technology.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Citigroup
Shares of Citigroup (C, Financial) traded around $43.70, showing the stock is significantly undervalued based on Thursday’s price-to-GF Value ratio of 0.64. The stock traded approximately 0.6% above its 52-week low.
The New York-based bank has a GF Score of 71 out of 100 based on a GF Value rank of 10 out of 10, a momentum rank of 7 out of 10, a profitability rank of 5 out of 10, a growth rank of 4 out of 10 and a financial strength rank of 3 out of 10.
Berkshire invested in 55,155,797 shares of Citigroup during the first quarter, giving the position 0.81% equity portfolio weight.
Other gurus with holdings in Citigroup include Hotchkis & Wiley, ValueAct Holdings LP and Bill Nygren (Trades, Portfolio)’s Oakmark Fund.
Bank of America
Shares of Bank of America (BAC, Financial) traded around $30.20, showing the stock is modestly undervalued based on Thursday’s price-to-GF Value ratio of 0.80. The stock traded approximately 1.08% above its 52-week low.
The Charlotte, North Carolina-based bank has a GF Score of 70 out of 100 based on a rank of 7 out of 10 for GF Value and momentum, a profitability rank of 5 out of 10, a growth rank of 4 out of 10 and a financial strength rank of 3 out of 10.
Berkshire owns over 1 billion shares of Bank of America, giving the position 11.45% equity portfolio weight.
Bank of New York Mellon
Shares of Bank of New York Mellon (BK, Financial) traded around $40.47, showing the stock is modestly undervalued based on Thursday’s price-to-GF Value ratio of 0.75. The stock traded approximately 1.17% above its 52-week low.
The New York-based investment company has a GF Score of 81 out of 100 based on a GF Value rank of 9 out of 10, a rank of 7 out of 10 for growth and momentum, a profitability rank of 6 out of 10 and a financial strength rank of 4 out of 10.
Berkshire owns over 72 million shares of Bank of New York Mellon, giving the position 0.99% equity portfolio weight.
U.S. Bancorp
Shares of U.S. Bancorp (USB, Financial) traded around $44.25, showing the stock is modestly undervalued based on Thursday’s price-to-GF Value ratio of 0.76. The stock traded approximately 0.83% above its 52-week low.
The Minneapolis-based bank has a GF score of 83 out of 100 based on a GF Value rank of 9 out of 10, a rank of 8 out of 10 for growth and momentum, a profitability rank of 7 out of 10 and a financial strength rank of 3 out of 10.
Berkshire owns over 126 million shares of U.S. Bancorp, giving the position 1.85% equity portfolio weight.
Ally Financial
Shares of Ally Financial (ALLY, Financial) traded around $33.14, showing the stock is undervalued based on Friday’s price-to-GF Value ratio of 0.70. The stock traded approximately 2.87% above its 52-week low.
The Detroit-based financial services company has a GF Score of 75 out of 100 based on a GF Value rank of 10 out of 10, a momentum rank of 8 out of 10, a profitability rank of 6 out of 10, a growth rank of 5 out of 10 and a financial strength rank of 3 out of 10.
Berkshire purchased 8,969,420 shares of Ally Financial during the first quarter, giving the position 0.11% equity portfolio weight.
