Warren Buffett’s Berkshire Hathaway takes new stake in JPMorgan

Warren Buffett’s Berkshire Hathaway has taken a nearly $4bn stake in JPMorgan Chase and pumped billions of dollars more into other US banks, as his sprawling investment group expanded its reach across American finance.

Berkshire, whose long-held bank stakes include American Express, Bank of America and Wells Fargo, disclosed in a regulatory filing on Wednesday that it had purchased 35.7m shares of JPMorgan, or about 1.1 per cent of the bank’s outstanding shares. 

The investment in JPMorgan takes the number of major financial institutions held by Berkshire to 14, in a $94bn portfolio that ranges from regional banks such as US Bancorp and M&T Bank to the largest lenders on Wall Street including Goldman Sachs. 

Berkshire itself is an insurance powerhouse, using the earnings it generates from policy premiums at its Geico and reinsurance units to invest in stocks or take over companies outright. While Mr Buffett has found a dearth of acquisition targets over the past two years, he and his investment protégés Todd Combs and Ted Weschler have instead ploughed billions into the US stock market.

The disclosure on Wednesday showed Berkshire also purchased more than 6m shares in PNC Financial, the regional bank with a large presence on the US east coast, worth more than $800m. It added to its stakes in Bank of America, US Bancorp and the Bank of New York Mellon.

Berkshire, whose overall stock portfolio was valued at $207bn at the end of September, cut its stake in Wells Fargo by about 9.7m shares in the third quarter. Mr Buffett last year said Berkshire would sell shares in the scandal-hit bank because it needed to keep its holding below the 10 per cent threshold at which the Federal Reserve can exert oversight over a bank shareholder.

The direct investment in JPMorgan comes after the bank and Berkshire teamed up with online retailer Amazon in a healthcare joint venture that they plan to use to cut their employee healthcare costs. Mr Buffett has also joined forces with JPMorgan chief executive Jamie Dimon to argue that companies should stop giving quarterly earnings guidance, to foster long-term thinking. The pair led a group of almost 200 US chief executives arguing that the nature of short-term reporting was harming the economy.

Berkshire’s Mr Combs is on JPMorgan’s board.

Wednesday’s regulatory filing reveals that Berkshire also scooped up shares in tech giant Oracle and insurance company Travelers during the third quarter, while it sold out of US big box retailer Walmart and reduced its stake in energy group Phillips 66.

The company also made the rare move of buying back its own shares in the quarter, underscoring the difficulty Mr Buffett has had finding appealing deals. 

Shares of JPMorgan climbed 1.5 per cent in after-hours trading on the news, while Oracle gained 2.6 per cent.