US Bancorp: A $1.7B Loss for Berkshire Hathaway?

Includes: BRK.A, BRK.B, USB
by: Dr. James V. Baker

US Bancorp (NYSE:USB) has been one of Warren Buffett’s favorite stocks. However, in the fourth quarter of 2008 he reduced Berkshire Hathaway’s (NYSE:BRK.A) holdings by 5,385,700 shares or 7.38%. It was one of the few stock positions he reduced during the fourth quarter. Prior to those sales he owned 72,937,126 common shares of USB and that represented 4.1% of USB shares outstanding.

The price of USB shares on September 30, 2008 was $36.02 and the value of BRK’s holdings was $2,627,194,000. By December 31, 2008 USB had fallen to $25.01, a decline of 30.57%. The total value of the USB shares not sold during the quarter therefore declined by $743,741,200.

If Buffett still has the same position in USB as he had at the end of 2008, he has watched his investment drop by an additional 57.7% as of February 20th when the stock closed at $10.58. That 51 day decline alone would equate to $974,767,977.

It is possible that Buffett has experienced a decline of approximately $1.7 billion or 70.6% in the value of BRK’s holdings in US Bancorp. It should come as no surprise that Berkshire Hathaway’s shares have been under downward pressure.