- (0:30) - Stock Rotations: Are Growth Stocks Slowing To A Halt?
- (7:00) - Breaking Down Warren Buffett's Current Bank Stock Holdings
- (21:20) - Episode Roundup: BAC, PNC, USB, GS, MTB, JPM, WFC,BK, AXP, V, MA
Welcome to Episode #163 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
In 2019, the growth stocks have faltered a bit and value has moved back into the spotlight.
Despite the FOMC cutting interest rates, which directly impacts bank earnings, investors have started to take another look at the banks because their valuations appear to be cheap.
Warren Buffett’s Berkshire Hathaway has always been a big investor in the financials, including the banks. The financials make up 47.4% of the total Berkshire portfolio, but that also includes insurance and credit card companies.
But Berkshire also owns a bunch of big bank stocks.
5 Intriguing Bank Stocks in Berkshire Hathaway’s Portfolio
1. Bank of America BAC is now the largest banking position in the portfolio at 12.9% of the total portfolio. Berkshire didn’t start buying shares until the third quarter of 2017. Earnings growth is still in the positive for 2019 and 2020, with earnings expected to rise 2.7% this year and 11.4% next year. Investors get a dividend yielding 2.3% as well.
2. PNC Financial PNC is a relatively new addition to the Berkshire portfolio, having been first bought in the third quarter of 2018. Shares are up 24.4% year-to-date and are no longer dirt cheap. They trade with a forward P/E of 13.1. But PNC does pay a slightly higher dividend than some others, currently yielding 3.1%.
3. US Bancorp USB was added to the portfolio in the third quarter of 2006, well before the financial crisis. But Buffett didn’t sell out of the position during those rocky times. Earnings are expected to rise 5.6% in 2019 and 2.5% in 2020. It’s not dirt cheap either, with a forward P/E of 13.2.
4. Goldman Sachs GS is the cheapest of the big banks in the Berkshire portfolio with a forward P/E of just 9.98. Earnings, however, are expected to decline 13.7% in 2019 before rebounding in 2020 by 9.7%. It’s a Zacks Rank #4 (Sell).
5. M&T Bank Corp. MTB is the “smallest” bank in Berkshire’s portfolio but it still has a market cap of $20 billion. Berkshire first bought shares in this bank in the first quarter of 2001. Talk about “buy and hold.” Year-to-date, these shares have lagged gaining only 7.5% compared to 21% for the S&P 500. This Buffalo-based bank is trading with a forward P/E of 11.5.
What else should you know about Berkshire Hathaway’s financial stocks?
Tune into this week’s podcast to find out.
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U.S. Bancorp (USB) : Free Stock Analysis Report
Bank of America Corporation (BAC) : Free Stock Analysis Report
M&T Bank Corporation (MTB) : Free Stock Analysis Report
The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
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