Stock Is The Only One Warren Buffett Picked During The Pandemic.

  Stock Is The Only One Warren Buffett Picked During The Pandemic. Many investors felt very sorry for Buffett for his moves during the pandemic. Berkshire sold most of its bank shares to avoid overexposure to the industry should the pandemic worsen. But the big move for Buffett and his company, Berkshire Hathaway BRK.A (NYSE) $433.333,00 -1.574,25 (-%0,36) (NYSE:BRK.B) appears to be their decision to load into its second largest bank, Bank of America BAC (NYSE) $47,63 +0,14 (+%0,29) It's worth reconsidering this decision and seeing why it turned out so well.

Bank of America performed very well.

In July and early August 2020, Buffett and Berkshire purchased additional shares, increasing their already large position in the company to approximately 12% of outstanding shares. With the stock gains, Berkshire owns more than 1 billion shares of the bank, valued at approximately $47 billion. It also obtained permission from the Federal Reserve to purchase 25% of BAC's outstanding shares. The shares have also outperformed their peers since July last year.

Stock Is The Only One Warren Buffett Picked During The Pandemic.

Like most of the industry, Bank of America weathered the pandemic well and maintained its strong credit quality. As the return to normal begins, investors have started flocking to the banks this year as a reopening game. However, Bank of America stands out among its peers as it is one of the most asset sensitive banks. Many investors anticipate a rate hike next year as the Fed begins to cut back on bond purchases. It seems that when long-term or short-term rates rise, Bank of America will benefit tremendously. Additionally, investors were pleased with Bank of America's third-quarter earnings report.

Credit where the credit is due

Investors were impatient with Buffett during the pandemic and disappointed with his sales. But now is the time to give him credit. He definitely nailed his choice with Bank of America. As it continues to grow its deposits very rapidly, the investment banking segment continues to strengthen. Buffett simply made a good choice.  

Source: The Motley Fool

You may also be interested in:

A Good Buy: Facebook.