Warren Buffett buys $3 billion stake from Citigroup in stock market spree looking for value

Warren Buffett’s Berkshire Hathaway has made a big bet on Citigroup, as the legendary investor funnels some of the conglomerate’s mammoth cash hoard into stocks during this year’s market downturn.

Berkshire bought $3 billion worth of Wall Street bank stock in the first quarter, giving the group a stake of about 2.8%, according to filings with regulators. The investment came as Berkshire sold the remainder of its position in Wells Fargo, a rival bank that was a staple of Buffett’s portfolio for more than three decades.

Buffett, chief executive of Berkshire, watched from the side as markets plunge and then recover at the height of the pandemic. But earlier this year, he poured $51.1 billion into the market as global equities slumped in the face of a hawkish Federal Reserve pivot, supply chain disruptions, high inflation and to the war in Ukraine.

Markets continued to slide, sending valuations of big tech companies, banks and consumer-facing businesses plummeting.

Berkshire ended 2021 sitting on a near-record cash pile of $146.7 billion — ammunition to make purchases even as other portfolio managers disclosed selloffs to track their investors’ exits.

Citigroup has fallen more than 21% this year, underperforming the average financial sector stock in the S&P 500 index, which is down 16% for the year.

The lender has lagged its Wall Street rivals in critical profitability measures for more than a decade and is the only major U.S. bank trading below book value at 52 cents on the dollar, according to FactSet. Citi also warned of Russia-related losses of up to $3 billion when reporting its financial results in April, contributing to a nearly halving of its profits for the quarter.

Chief executive Jane Fraser promised to boost returns by exiting less efficient businesses such as international retail banking and focusing on more profitable divisions such as wealth management and transaction services.

The downed stocks weren’t the only ones attracting Berkshire.

The conglomerate bought $7.7 billion worth of shares in oil and gas company Occidental Petroleum and increased its stake in oil major Chevron. Shares of Occidental have risen nearly 120% this year while Chevron has soared 45% as energy prices rose on strong demand and the prospect of reduced supplies from from Russia.

Buffett’s company also invested $2.6 billion in Paramount Global, the US media group formerly known as ViacomCBS, and bought $400 million worth of shares in lender Ally Financial. Paramount has lost 7% this year, while Ally has lost almost a fifth.

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