Berkshire Tweaks Bank Play With $2.9 Billion Bet on Citi

Katherine Chiglinsky and Max Reyes, Bloomberg News

(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc., which cut many bank holdings as the pandemic bore down on the US, is back with a roughly $2.9 billion bet on Jane Fraser’s Citigroup Inc. even as it said goodbye to a long-time stake in Wells Fargo & Co.

The company also added a $2.61 billion bet on Paramount and a nearly $390 million stake in Ally Financial Inc., according to a regulatory filing Monday. Buffett’s firm also disclosed new stakes in McKesson Corp., Markel Corp. and Celanese Corp.

Berkshire has spent recent years revamping its bank bets. It pulled back from big-name investments including stakes in JPMorgan Chase & Co. and Goldman Sachs Group Inc., while sticking with Bank of America Corp. and US Bancorp. Wells Fargo, an investment made more than three decades ago by Berkshire, has been whittled down and finally disappeared from the quarterly filing this time around.

Berkshire’s now betting on Citigroup as new management takes over. Citigroup’s shares have been languishing even as new CEO Fraser seeks to refocus on higher-returning businesses like wealth management and treasury offerings. The shares have traded below book value -- a sign that investors believe executives are actively destroying shareholder value -- since 2018. A Citi spokeswoman declined to comment.

Buffett, Berkshire’s chief executive officer and chairman, and his investing deputies have been on one of Berkshire’s biggest buying sprees, with about $41 billion of net purchases during the first quarter. That’s the most in data going back to 2008.

Buffett’s company had disclosed some ramped-up bets ahead of the filing. It expanded wagers tied to oil, with purchases of Occidental Petroleum Corp. stock and a bigger investment in Chevron Corp. that vaulted that holding among Berkshire’s top-four stock bets. The company also built out an investment in Activision Blizzard Inc. as part of a merger arbitrage play to wager that the deal with Microsoft Corp. will close. And it moved further into the technology realm with a wager on HP Inc. disclosed in April.

The filing Monday reveals that the buying spree went even deeper. Berkshire now owns a $1.13 billion stake in chemical maker Celanese, as well as an $895 million holding in McKesson. The company also boosted stakes in General Motors Co. and furniture company RH.

Berkshire pulled back on certain bets. The Verizon Communications Inc. stake was down 99% in the first three months of the year. The company’s filing no longer showed stakes in AbbVie Inc. and Bristol-Myers Squibb Co.

(Updates with revamp, Citigroup details, other stock bets starting in third paragraph.)