Summary List Placement
Warren Buffett may have cut his Wells Fargo holdings because the bank’s board went against his advice and hired a Wall Street chief as its new CEO, Bloomberg said.
The famed investor and Berkshire Hathaway CEO told the Financial Times last year that Wells Fargo should hire someone from outside Wall Street or risk angering Congress. “That’s just not smart,” he said.
Buffett’s company has owned shares in the bank for more than 30 years, but it has slashed its position by more than 60% this year to a 17-year low.
Investors will learn next month whether Berkshire has exited the position entirely.
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Warren Buffett may have slashed his Wells Fargo stake to a 17-year low this year because the bank’s directors ignored his advice and hired a Wall Street executive as their new CEO, according to Bloomberg.
The billionaire investor and Berkshire Hathaway CEO told the Financial Times last year that Wells Fargo, still reeling from its fake-accounts scandal, risked angering regulators if it hired its next boss from JPMorgan, Goldman Sachs, or another big bank.
“They just have to come from someplace [outside Wells] and they shouldn’t come from Wall Street,” Buffett said.
“There are plenty of good people to run it [from the Wall Street banks], but they are automatically going to draw the ire of a significant percentage of the Senate and the US House of Representatives, and that’s just not smart,” he added.
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However, Wells Fargo went against the guidance of its biggest shareholder and appointed Charles Scharf, who worked at JPMorgan before running Visa and later BNY Mellon, in September of last year. It also agreed to let its new chief executive run the California bank from New York.
“That’s outrageous,” Charlie Munger, Buffett’s right-hand man and Berkshire’s vice-chairman, said about the working arrangement in a Bloomberg interview earlier this year.
Berkshire has been a Wells Fargo shareholder for more than 30 years, counting the bank among its five biggest holdings for most of that time. It owned more than 13% of the bank in 1994, and boasted more than 500 million shares worth over $27 billion in 2016.
However, it has cut its position by …read more
Source:: Business Insider