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Warren Buffett’s Berkshire Hathaway made a $954 million bet on credit card and banking company Capital One in the first quarter, one of the few new bets added by the investment group when it dumped billions of dollars worth of stocks .
The investment disclosure on Monday signaled Berkshire and Buffett’s comfort with the health of the credit card industry and consumers’ pocketbooks, as many regional banks have been mired in financial turmoil. Capital One describes itself as the third largest issuer of Visa and MasterCard credit cards in the US.
Berkshire has focused its financial industry investments on a handful of large US banks — Bank of America and Citigroup — as well as credit card companies including American Express, Visa and Mastercard.
Buffett, Berkshire’s chief executive, earlier this month sounded a cautious tone about the banking industry’s prospects, saying the bank’s move into the era of online accounts has changed the calculus of investments in the sector.
“You don’t know what happened to the stickiness of deposits . . . and that changes everything,” he told shareholders gathered in Omaha for the company’s annual meeting. “You can run out in seconds.”
Regulatory disclosures on Monday also showed that Berkshire exited its positions in US Bancorp and Bank of New York Mellon in the first quarter.
The 2.6 percent stake Berkshire bought in Capital One completed its big bet on auto and home lender Ally Financial that it made last year. Berkshire modestly reduced its position in Eli in the first quarter.
Shares of Capital One jumped 6 percent in after-hours trading.
Capital One is increasing its provisions for credit losses as the economy slows and inflation nibbles on the heels of consumers. But the company is not beset by the same fears that plague the wider banking industry. Its shares have declined about 4 percent this year, compared with a 26 percent decline by the KBW Bank index.
Berkshire also revealed it has slashed its stake in oil major Chevron by about a fifth, selling about 35 million shares between its own accounts and an investment portfolio managed by a subsidiary.
The company exited its remaining position in chipmaker Taiwan Semiconductor Manufacturing, with Buffett hinting at geopolitical tensions between Taiwan and China for stock sales this year and last year.
