Berkshire Hathaway suffers big paper losses by holding onto investments in big financial companies.
Warren Buffett's Berkshire Hathaway has spent at least $11.6 billion in the last five months buying convertible securities, preferred stock and debt issued by General Electric Co, Goldman Sachs Group Inc, reinsurer Swiss Re, jewelry maker Tiffany & Co and others, all yielding at least 10 percent.
Meanwhile, Berkshire Hathaway has suffered big paper losses by holding onto investments in big U.S. financial companies.
Berkshire Hathaway's portfolio of U.S.-listed equities shrank 26 percent in the quarter to $51.87 billion from $69.89 billion.
Berkshire Hathaway reduced stakes in health-care company Johnson & Johnson and consumer products company Procter & Gamble Co. But it held onto 290.2 million shares of Wells Fargo & Co, although its value fell 22 percent in the quarter to $8.55 billion, and a 151.6 million share stake in American Express Co, whose value fell 48 percent to $2.81 billion. Berkshire's stake in U.S. Bancorp fell 7 percent to 67.6 million shares.
"The big story is that he's not giving up on banks and financial institutions," said Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, California, as quoted by Reuters.
"It shows his conviction that, once the deleveraging process is complete, companies with strong cash flow are going to be valued more highly by investors," Yoshikami added. "He's getting 10 to 15 percent interest on money he lends and may be selling stocks to fund that. He has become the secondary lender of choice to the financial world."
Berkshire Hathaway disclosed its holdings in a U.S. Securities and Exchange Commission filing.