Warren Buffett is considered by many to be the greatest investor of all time. And, he's getting even greater.
Shares of Buffett's Berkshire Hathaway are trading at all-time highs; Class A shares of the investment management company closed Tuesday at a record $187,101 while Class B shares closed at a more palatable $124.69.
What's driving Berkshire Hathaway to record highs? Part of it has to do with its largest holding, Wells Fargo, which is also trading near its all-time highs.
As of December 31, 2013, Berkshire Hathaway owned 463.5 million shares of Wells Fargo which makes up about 8.8% of the bank's stock. At $22.16 billion, Wells Fargo is one-fifth of Berkshire Hathaway's portfolio of publicly traded companies.
So far, Buffett has made a pretty good bet. In the last twelve months, the S&P 500 Financials sector index is up 24% but stock in Wells Fargo, the nation's largest mortgage servicer, is ahead with a gain of 32%.
CNBC contributor Gina Sanchez, founder of Chantico Global, believes Buffett's investment will continue to win.
"I definitely see further good times ahead," say Sanchez. "They have a huge mortgage business, but they're also increasing their credit card business [and] international banking…. They also have a low dividend payout ratio so dividends could drive this stock up."
Sanchez says Wells Fargo is the sort of investment Buffett loves. "They seek to be America's community bank," she says.
"Even after this run, I think there's a lot more to come."
(See: CNBC's Warren Buffett Watch)
Talking Numbers contributor Richard Ross, Global Technical Strategist for Auerbach Grayson, agrees with Sanchez and Buffett.
"It's a real good story," says Ross. "In fact, it's a story which has gotten increasingly better just over the past few days."
Ross says market skeptics were concerned about the benchmark S&P 500 index rallying while the financial sector wasn't participating. That changed as of late, he notes.
The stock has been trading in a upward-sloping trend channel which Ross believes will continue. "I think that channel goes higher," says Ross. "The stock goes along with it. You want to use any weakness within the context of that trading range to be a buyer of the stock on a pullback. For the time being, I like financials and, in particular, you have to like the chart of Wells Fargo. "
To see the full discussion on Wells Fargo with Sanchez on the fundamentals and Ross on the technicals, watch the video above.
- Financials Industry
- Warren Buffett
- Berkshire Hathaway