The model portfolio of Insiders Plus gains 48% last year; here, editor Jack Adamo reviews two of his portfolio holdings -- both bank stocks being accumulated by Warren Buffett's Berkshire Hathaway.
"U.S. Bancorp (NYSE: USB) reported a slight decrease in Q1 earnings of 62¢ per share versus 63¢ last year; the shares rose 2.8% the next day. Compared to the disastrous results of its peers, this small decline in earnings was a home run.
"That's a testament to the company's savvy managers. USB steered clear of the toxic problems that choked most banks. Only 2.7% of its loans are subprime.
"Warren Buffett's Berkshire-Hathaway continues to buy the stock steadily. Recent SEC filings show that in the fourth quarter of 2007 Berkshire increased its share of the Minneapolis-based bank by 3 million shares to a total of 75 million.
"This represents 4.4% of its shares outstanding, and up tremendously from its stake of 23 million shares just a few years ago. The Wizard of Omaha knows what he likes and why he likes it.
"Meanwhile, Wells Fargo & Company (NYSE: WFC) reported Q1 earnings of 60¢ per share down 9% year-over-year, but up 46% from the December quarter. Like USB, Fargo shares continue to be accumulated at Berkshire Hathaway.
"The stock is a solid long-term buy, with good prospects of steadily raising its 4.2% dividend. It has capital appreciation potential to boot, especially after the housing hangover abates."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
5-05-2008 @ 11:59AM
Michael Schneider said...
Apparently, Warren Buffett is buying for the very long haul as his comments this weekend indicate that banks will be in some trouble for quite a while yet. (See his some of his comments in the news over the weekend in the Billionaire Watch section- yellow label, top- at http://www.Barrelomoney.com).
Many builders are on the ropes-- even in Iowa this weekend the big news was one of the largest builders- Regency- may (emphasize "may" I am not trying to through fuel on this fire) have to go into bankruptcy and home buyers are being cautioned that if they buy from Regency their purchases may be held up by liens on the properties. This cannot be good for banks-- Wells Fargo apparently had a lot of business with Regency but lessened that exposure last year but there are other builders in some trouble. Warren Buffett does have the housing picture right- it won't be over this summer.
5-05-2008 @ 12:26PM
william lindblad said...
Buffet does not get everything right and buying Wells Fargo may be a big mistake. They have a lot of exposure in housing and not all was sub-prime. The problem is that sub prime, fuel and food are now effecting the next level up. Buffet is hardly alone in the "a long way from over" thinking.