While the market is trying its best to trade higher today, US Bancorp (USB), which until recently had held up relatively well during this bear market, is getting hit hard. As shown in the chart below, the stock is trading down nearly 20% today after reporting a 65% decline in Q4 income due to larger than expected writedowns during the quarter. With today's decline, the stock joins the rapidly growing list of financial sector stocks that have lost at least half of their value already this year.
US Bancorp's largest shareholder is Berkshire Hathaway (BRK/a), which holds a stake of more than 4%. It is because of Berkshire's large stake that many have recommended the stock throughout the credit crisis. The reasoning was that Warren Buffett wouldn't invest in a bank if he thought it had taken on too many risky investments. So much for that argument.
In fact, a look at Berkshire Hathaway's equity holdings from its most recent filing shows that while its portfolio held up better than the S&P 500 over the course of 2008, 2009 has already been a tough time for the company. Year to date, the dollar value of Berkshire's equity portfolio (using the company's filing as of 9/30) is down 15.6% compared to a 10% decline in the S&P 500. And Berkshire's third largest holding, Wells Fargo (WFC), which has also often been cited as one of the 'safe' financials out there, is down nearly 51% so far in 2009 (see table below) as well. Like just about every other investor, even Buffett is having a hard time making money in this market.
Buffett is widely considered to be among the greatest investors of all time. However, his growing list of 'headaches' (index put options that Berkshire wrote, GS and GE preffered stock deals, WFC, and now USB) and the performance of Berkshire's stock have shown that even the best haven't been spared during this bear.
Click here to subscribe to Bespoke Premium today!
No comments:
Post a Comment