Photographer: Scott Eells/Bloomberg

Buffett's Wells Fargo Stake Hits Level Requiring Fed Review

  • Billionaire oversees more than 500 million shares in bank
  • Wells Fargo buybacks increased Buffett's ownership stake

Warren Buffett’s holding in Wells Fargo & Co. reached 10 percent, a level that triggers a Federal Reserve review and could prevent him from buying more shares until he receives regulatory approval.

The billionaire investor’s stake reached that threshold because Wells Fargo has been buying back stock, according to a regulatory filing Monday. The document said the holding is about 506 million shares, the same as on Dec. 31 when it accounted for 9.9 percent.

Buffett, 85, has long been a fan of Wells Fargo and invested in the bank in 1989. Since then, he’s built the holding into one of Berkshire’s largest stock investments. While his company also has stakes in Goldman Sachs Group Inc. and U.S. Bancorp, the billionaire has said he favors concentrating his bank investments in Wells Fargo.

“I like loading up on the one I like best,” he told Bloomberg Television’s Betty Liu during an interview in 2013.

Most of Buffett’s investment is held through subsidiaries of his Berkshire Hathaway Inc., though he also owns some shares of Wells Fargo personally. All together, the stake is worth more than $24 billion based on Monday’s closing share price.

Wells Fargo’s View

“We value Berkshire Hathaway as a long-term shareholder and customer and appreciate the confidence that Berkshire’s executive team has shown in Wells Fargo,” Mark Folk, a spokesman for the San Francisco-based lender, said in an e-mailed statement.

Investors typically have to tell the Fed and the public before acquiring 10 percent ownership in a bank, though that notice can be delayed if the threshold is reached because of share repurchases. Regulators then review the investment. The U.S. has long limited the ties between non-financial companies and banks.

Still, there are pledges that investors can make to show that they don’t plan to influence a bank or its management. In the 1990s, for instance, Buffett increased his holding in American Express Co. to more than 10 percent. At the time, he agreed to follow the credit-card issuer’s recommendations in voting company shares. Berkshire made a similar commitment to the Fed, according to the lender’s proxy filing. Berkshire’s AmEx stake was about 16 percent as of Dec. 31.

Buffett’s View

David Skidmore, a spokesman for the Fed, and Wells Fargo’s Folk had no immediate comment on whether there are talks about drafting an agreement similar to the one with AmEx. Buffett didn’t immediately respond to a request for comment.

The billionaire has long favored investing in companies where he thinks management is capable. He seldom interferes with their decisions and often praises them in public. He reiterated in a separate filing on Monday that the Wells Fargo shares “were not acquired and are not held” for the purpose of changing control of the bank.

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