With the banking industry beaten down over the last couple of years, institutional investors are circling like vultures to find financial institutions that have a lot of upside potential, and a couple of major banks on the radar of the firms are Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C), which has some major investors buy shares in them for the quarter ending December 31.
Reports filed from Paulson & Co. and Berkshire Hathaway (NYSE:BRK-A) show that they both targeted Wells Fargo during the last quarter, and Paulson also increased his holdings in Citigroup during that time, while divesting of some shares in Bank of America (NYSE:BAC). The data come from the filing of the required Form 13F for companies with over $100 million in equities to invest.
Even though Paulson sold some Bank of America shares, the company still has holdings valued at $2.27 billion in the bank. By the end of 2011, Paulson has estimated Bank of America could increase to $29.81 a share, almost double what it is now. The hedge fund sold about 8.8 million shares in the company, which now stands at 151 million, down from the 159.8 million it previously held.
Paulson also acquired 17.5 million shares in Wells Fargo & Co. during the fourth quarter, and added to its holdings in SunTrust Banks Inc., which now stands at 6.1 percent of the company.
Paulson & Co. was one of the best performing hedge funds in 2009, managing close to $32 billion.
Wells Fargo was also the target of Warren Buffett and Berkshire Hathaway again, as Buffett increased his position in Wells, buying another 7 million shares in the fourth quarter. Berkshire already has a large share in Wells Fargo, and has had for some years.
Interestingly, Buffett sold shares SunTrust Banks during the quarter, taking the opposite direction Paulson did, but that was probably done to raise funds for the acquisition of Burlington Northern Santa Fe Corp., rather than something related to the company.
While Buffett doesn’t like to make too many moves like that, it was an extraordinary circumstance, which had him selling positions in a large number of other companies for the same reason. Buffett usually will hold a company for a long period of time, and only sell under unique conditions and major market changes.
