HE Berkshire Hathaway Inc’s Warren Buffett announced on Saturday, May 6, 2023 that the benefitsthe first quarter amounted to 35,500 million dollars, a fact that captures tearnings from common stocks like those of Apple Inc.while increased investment income fueled the operating profit
HE Warren Buffett In a major intervention on the banking crisis plaguing the US, he said on Saturday, May 6, 2023, that he would be “catastrophic” letting any Silicon Valley Bank depositor lose their money when regulatory authorities put andby forced management California Regional Bank.
its collapse Silicon Valley Bank on March 10 It caused panic throughout the financial system.
In an effort to restore calmUS officials made the controversial decision nto protect all depositors in it, even if their accounts were over the $250,000 limit. which is insured by Federal Deposit Insurance Corporation (Deposit Insurance Agency()).
He did the same with his depositors. signature bankin his invocation systemic risk involved in the sudden collapse of both institutions.
Since then, some observers have called on the US government.increase levels of deposit insurance or provide system-wide protection for all deposits as a way to prevent future crises in the financial system.
“I can’t imagine anyone saying that I would like to be the one to explain [στο] American public cbecause we only keep $250,000 insured (in deposits) and we are going to initiate a massive flight of deposits in all the banks of the country and disrupt the global financial system”Buffett said Saturday, May 6, at the Berkshire Hathaway annual meeting.
Not protecting all depositors, he said, “would be disastrous.”
The comments were the first by Buffett about the banks during a meeting where he is expected to discuss the current turmoil at regional banks.
HE 92 year old billionaire has assumed its role for decades savior at various financial institutions.
He has said little about the current crisis so far this year beyond a recent interview with CNBC’s Becky Quick, where he acknowledged that cut Berkshire’s exposure to the sector amid concerns that the banking business could face various “troubles.”
“I didn’t like banking as much as before,” he said during the April 12 interview.
“I just think youthe system is not well configured in terms of linking the punishment with the culprit,” he added.
“It’s incredibly important that the banking system works well.”
Berkshire has not been able to completely escape the chaos of the first quarter.
In fact, it revealed that the The value of its stake in Bank of America (BAC) fell $4.7 billion in the first three months of the year, to $29.5 billion.
First quarter financial results
Berkshire Hathaway announced on Saturday May 6, 2023 that ta first-quarter profit of $35.5 billion, reflecting gains from common stocks like Apple Inc, while higher investment income boosted operating profit.
He net profit promoted to $24,377 per class A share and marking a jump the $5.58 billion, or $3.784 per share, a year earlier.
He operating profit fourth augmented by 13% to $8.07 billionor about $5.561 per Class A share, up from $7.16 billion.
The Omaha, Nebraska-based company said it it also repurchased $4.4 billion of its own shares during the quarter.
As of March 31, 2023, the company’s insurance liquidity was approximately $165 billion, an increase of approximately $1 billion from the end of 2022
About 77% of total equity investments at fair value were concentrated in American Express, Apple, BofA, Chevron and Coca-Cola as of March 31..
He consequences of the covid-19 virus pandemic continue to affect Berkshire’s operating activities, as well asand geopolitical conflicts, he supply chain disruptionsgovernment actions for slowdown in inflation in recent years have produced effects on the operating results of companies
The company, which bought $2.87 billion worth of stock. and sold equity securities worth $13.28 billion in the first quarter, closed the period with $130.6 billion in cash and cash equivalents.
Relations with banks
The Omaha sage sold off much of Berkshire’s stake in US banks between 2020 and 2022, just months before the turmoil in the banking system that began in mid-March.
HE berkshire leave the jPMorgan Chase (JPM), Wells Fargo (WFC) and Goldman Sachs (GS) during the period, and also significantly reduced its stake in the regional bank US Bancorp (USB) and Bank of New York Mellon (BK).
Berkshire still has significant stakes in giants Bank of America and Citigroup, as well as a smaller part of digital bank Ally Financial (ALLY), which means that he could not completely escape the effect of events.
“I guess they didn’t think they were going to make as much in the next five to 10 years as if they did something else,” said Bill Smead, founder and chairman of Smead Capital Management, when asked why Berkshire exited banking. when he did
Communication with the government
It has yet to play the role of savior during this crisis, at least in whatever way there is. published so far, but he may have offered some of his advice to the White House.
Reuters reported that he spoke with the Biden administration about March while the banking turmoil raged.
When asked about those conversations, he told CNBC that “I haven’t talked to anyone recently, but I’ve talked to a few.”
“A very good deal”
their complicated relationship buffett with banks andfor more than five decades.
It started when B.Erkshire in 1969 purchased the Illinois National Bank and Trust in Rockford, Ill.
Buffett eventually discontinued them after areview of US banking laws that required him to own non-bank businesses at the same time.
During the market crash in 1987 invested in your investment bank Solomon Brothers Of Wall Street, only to see the investment failit was a bond trading scandal it nearly bankrupted the company.
He became president of the company and ran it for nine months.
He saved her, aShe called the experience a “painful experience.” in a 1992 shareholder letter.
However, that didn’t stop him from placing big bets in more traditional commercial banks that took deposits and made traditional loans.
Actually, he did the largest investor in Wells Fargo, Bank of America, Bank of New York Mellon and US Bancorp.
Wells Fargo’s ownership, which began in 1989, increased as much as 13% in 1994.
“Banking has been an extremely good business in this country,” he told shareholders at the 2003 annual meeting.
His role in the 2008 financial crisis
His connection to the industry deepened it. 2008when dit was instrumental in restoring confidence in banks during the worst financial crisis since the Great Depression.
HE Goldman Sachs she turned to him for funds, along with his and hers seal of trust gave a capital “injection” of 5 billion dollars.
It was also Buffett who suggested it. 2008 to then Secretary of the Treasury Henry Paulson, that the federal government should contribute to Mr.capital in banks to stabilize the system.
This became an official one. providing $250 billion; although some of the larger banks insisted they did not need the money.
He did his part again savior he 2011 when he gave “$5 billion injection into Bank of America;
At that time b.ryan moynihan He was still a relatively new CEO, and the bank’s shares came under severe pressure due to subprime loan losses.
More investment followed, pincluding a $4 billion stake in industry giant JPMorgan Chase in 2018 and a new stake in PNC Financial Services Group (PNC), another regional bank.
He even told Yahoo Finance before aof the purchase of JPMorgan who should have bought the shares before:
“I wish we would buy a lot more. I made a mistake.”
Of course I noticed,,,
But Berkshire’s stock changed during the COVID-19 pandemic, when he started downloading many of the same entries he had been collecting for years.
Perhaps most important was Wells Fargo given Buffett’s long association with the stock and the company.
At Berkshire’s 2015 annual meeting, Wells Fargo even drove its wagon down Omaha’s 10th Street as part of a celebration of 50 years of Buffet at the head of the conglomerate.
He also parked another inside the showroom, where companies wholly or partly owned by Berkshire displayed their wares.
Buffett began to reduce Wells’ position in 2018 thereafter of a series of scandals that shook the bank, including disclosures that employees pressured by sales targets to open millions of accounts that customers didn’t want and impose fees that weren’t necessary.
Download the latest actions in 2022.
Berkshire no longer owns any of the JPMorgan, Goldman, PNC, and M&T Bank (MTB).
All tickets were sold during the pandemic.
Latest Drop in Industry Share Revealed occurred in the last quarter of 2022, when Berkshire reduced its stakes in Bank of New York Mellon and US Bancorp by 69% and 95%.
Buffett did not discuss specific banks or positions in his April 12 interview with CNBC.
However, he made it clear that he had noticed some worrying trends in the face of the current banking chaos.
“Accounting procedures have led some bankers to do some things that may have helped their current earnings a bit…and pthey shook off the repeated temptation to take a slightly wider markup (markup between the lending rate and the deposit rate) and pragmatopoi;hsoyn a little more profit“, he said.
“and I had it result what could you predict».
“I noticed”make a note of.