Citigroup shares jump 6% after Warren Buffett reveals a nearly $3 billion stake in the troubled bank

Warren Buffett, Chairman and CEO of Berkshire Hathaway.

Andre Harnik | PA

The 91-year-old “Oracle of Omaha” scooped Citi shares as they underperformed the rest of the financial sector over the past 12 months. The stock is down almost 40% while the Financial Select Sector SPDR fund is down 12% over the same period.

Citi welcomed Jane Fraser as its new CEO a year ago, the first female head of a major US bank. It has set itself a medium-term target of 11% to 12% for return on tangible equity, aiming to overhaul a company that has deeply underperformed its US rivals for years.

Fraser opted to exit the less profitable parts of the company’s global empire, including leaving 13 retail markets in Asia and Europe.

Citi now joins some of those rivals in Buffett’s portfolio. Berkshire held $41.6 billion of Bank of America at the end of March, marking its second-largest holding after Apple. Berkshire has owned Bank of American since 2017.

Berkshire has acquired a new $390 million stake in Ally Financial. The stock jumped 4% in premarket trading on Tuesday following the disclosure.

The conglomerate also held shares in Bank of NY Mellon, US Bancorp, Mastercard and Visa. The conglomerate sold its position in Wells Fargo in the first quarter.

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