Investors might view the Bank of America deal as Buffett talking his book.
Berkshire’s entire portfolio is heavily invested in the U.S. He’s the biggest shareholder in Wells Fargo, the biggest mortgage lender in the U.S. after Bank of America. Wells Fargo shares rose over 2% on the announcement of Buffett’s investment in BofA.
The CIO of the boutique investment firm Aristar Funding Corp, JT Smith, suggested the same thing morning. He warned his Twitter followers, “[Don’t be fooled.] Buffett has 350 million shares of Wells Fargo, off which he has made about $400 million this morning, off of injection in Bank of America… He’s protecting his real money.”
Perhaps this is one reason why Bank of America is losing some the gains it made after Buffett announced he’s investing $5 billion in the company.
The share price is down to $7.70 from highs earlier today of $8.70.
In fact, 9 out of 10 of the biggest gainers this morning were financial stocks, and now many are losing those gains too.