Buffett's Latest Acquisitions Indicate Value In Financials

Berkshire Hathaway's (BRK.A) Warren Buffett is buying banks. Buffett bought Bank of America (BAC) during the 3-months ended 6/30. His purchase prices were between $ 48.34 and $ 50.14,with an estimated average price of $49.6 for his 8.7 million shares. Now, the BAC position is small for Berkshire, as it represents 0.7 % of Berkshire's holdings as of 6/30. His holdings was 8,700,000 shares as of 2007-06-30.

Buffett has long been a fan of financials holding shares in Wells Fargo (WFC), M&T Bank (MTB) and HSBC Holdings (HBC). According to the site Gurufocus, Buffett has almost 40% of Berkshire's holding in financials.

Buffett's purchase is indeed a sign not of a short term bottom in the sector, but of the long term health of it. While Buffett's typical holding period for a common stock has nearly evaporated for his "forever" mantra of earlier years, he still has a multi year time frame which on Wall St. is an eternity.

It also indicates "value" now exists in financials, a sentiment I posted on yesterday. Do not confuse "cheap" with "value". A cheap stock is one that will not cost you much money to purchase. A value stocks costs what it costs to buy, but is worth much more. This is a significant difference.

Comments

[barcswine:]

I am bullish on the market, and also on the U.S. dollar. Financial stocks may very well weaken further over the next 9 months, but quality financial stocks will recover fully and then some by late 2009 as will the housing market. The dollar will begin to reverse its downward trend by or before 10/08, and make a siginificant reversal by 4/09.

In short I am still long on the market, but being very selective at this time

2007 Nov 16 08:40 PM

[barcswine:]

I am bullish on the market, and also on the U.S. dollar. Financial stocks may very well weaken further over the next 9 months, but quality financial stocks will recover fully and then some by late 2009 as will the housing market. The dollar will begin to reverse its downward trend by or before 10/08, and make a siginificant reversal by 4/09.

In short I am still long on the market, but being very selective at this time

2007 Nov 16 08:41 PM