Warren Buffett, the “Oracle of Omaha” and CEO of Berkshire Hathaway, grabbed a larger stake in Wells Fargo & Company (NYSE:WFC) while unceremoniously breaking up with Intel Corporation (NASDAQ:INTC), according to the hedge fund’s quarterly filing with the SEC Tuesday.
Though Wells Fargo & Company (NYSE:WFC) has less than global exposure and reach than competitors like Citigroup Inc. (NYSE:C) and Bank of America Corp. (NYSE:BAC), it has been a favorite investment play for Buffett’s Berkshire hedge fund for more than 20 years. In Berkshire’s filing, it revealed that the hedge fund had increased its position in Wells Fargo by 4.2 percent during the second quarter of 2012, to a total of 411 million shares with a value of about $14 billion. Overall, Berkshire owns just shy of 8 percent of the bank’s shares. Since the start of the year, Berkshire has added 10.6 million shares to its position and about 104 million since early 2009.
Essentially, to make room for the additional Wells Fargo & Company (NYSE:WFC) shares, Berkshire dumped all 7.7 million shares it held in Intel Corporation (NASDAQ:INTC) during the most recent quarter, according to the SEC filing.
Why does Buffett like the bank so much? One San Francisco banking reporter put it this way in a blog post: “(Buffett is) a big fan of the bank’s low cost of funds gathered in checking and savings accounts that pay little or no interest. That’s a huge advantage in the business of lending money. And those low-cost deposits will be a more valuable advantage when interest rates rise, allowing the bank to make a bigger spread between what it pays on deposits and earns on loans.”
Berkshire’s stake in Intel Corporation (NASDAQ:INTC) constituted less than 0.5 percent of the total portfolio, while the added Wells Fargo & Company (NYSE:WFC) shares increases that stake to nearly 20 percent of the entire portfolio. Check out Buffett’s top stock picks.