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Berkshire invests in JPMorgan, Oracle as Buffett puts cash to work

Stock MarketsNov 14, 2018 06:59PM ET
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© Reuters. FILE PHOTO: Warren Buffett, CEO of Berkshire Hathaway Inc, pauses while playing bridge as part of the company annual meeting weekend in Omaha

By Jonathan Stempel

(Reuters) - Warren Buffett's Berkshire Hathaway (NYSE:BRKa) Inc deepened its commitment to the U.S. financial industry, announcing a $4.02 billion stake in JPMorgan Chase & Co (NYSE:JPM) and new investments in PNC Financial Services Group Inc (NYSE:PNC) and Travelers (NYSE:TRV) Companies Inc, plus a stake in Oracle Corp (NYSE:ORCL).

The investments were disclosed in a Wednesday regulatory filing detailing Berkshire's U.S.-listed stocks as of Sept. 30, following a quarter when the Omaha, Nebraska-based conglomerate spent $17.7 billion on equities.

According to the filing, Berkshire owned $829 million of PNC stock, $460 million of the insurer Travelers, and $2.13 billion of Oracle, the database software company.

It also added to its sizable stakes in two earlier Buffett investments, Bank of America Corp (NYSE:BAC) and Goldman Sachs Group Inc (NYSE:GS).

“While nervous investors fear the end of the economic recovery, Mr. Buffett is buying economically sensitive bank stocks," said Bill Smead, who runs Smead Capital Management Inc in Seattle and owns Berkshire stock. "It makes owners like us not mind sitting through a correction with them."

Though the filing did not say which individual purchases Buffett or his investment managers Todd Combs and Ted Weschler were responsible for, investors watch Berkshire's quarterly stock listings for signs about where the trio sees value.

Shares of JPMorgan, PNC and Travelers each rose at least 1 percent in after-hours trading following Berkshire's disclosure of its new stakes, while Oracle shares rose 2.4 percent.

JPMorgan and Travelers declined to comment. PNC, Oracle and Buffett's assistant did not immediately respond to requests for comment.

The investment in JPMorgan, where Combs is a board member, closes a notable hole in Berkshire's portfolio.

Berkshire had already been the largest investor in several companies, including American Express Co (NYSE:AXP), Bank of America, Bank of New York Mellon (NYSE:BK) Corp, US Bancorp (NYSE:USB) and Wells Fargo (NYSE:WFC) & Co, according to Refinitiv data.

Buffett has long praised the leadership of JPMorgan Chief Executive Jamie Dimon, and over the last year partnered with him and Inc (NASDAQ:AMZN) Chief Executive Jeff Bezos to create a new company aiming to cut U.S. employee healthcare costs.

Atul Gawande, a surgeon and critic of medical industry practices, was named in June to lead the venture.

Buffett and Dimon also teamed up in June to call on companies to stop giving quarterly earnings forecasts, because they encourage an unhealthy focus on short-term profit at the expense of sustainable long-term growth.

Berkshire has more than 90 businesses in the insurance, energy, food and retail, industrial, railroad and other sectors.

Buffett, however, has not made a major acquisition since buying aircraft parts maker Precision Castparts in January 2016.

He often buys stocks such as Apple Inc (NASDAQ:AAPL), in which Berkshire previously disclosed a $57.6 billion stake, when buying whole companies appears too expensive.

Berkshire also spent $928 million repurchasing its own stock in the quarter.

Despite the stock purchases, Berkshire ended September with $103.6 billion of cash and equivalents.

Berkshire also reported other portfolio changes, including the shedding of holdings in Walmart (NYSE:WMT) Inc and French drugmaker Sanofi (PA:SASY) SA and reduction in its stake in oil refiner Phillips 66 (NYSE:PSX).

Berkshire invests in JPMorgan, Oracle as Buffett puts cash to work

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