The Oracle of Omaha Strikes Again

Warren Buffett is taking another swing at the major American banks...‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

SPONSORED Do You Own ANY 5G Stocks? CNN calls 5G "the lifeblood of the new economy." If you don't invest now, you'll regret it later. Click here for details on the top 5G stock... MARKET TRENDS An Undervalued Sector Adored by Warren Buffett Jody Chudley, Contributing Analyst, The Oxford Club For months, I've been pounding the table about why American banks are the best value in the stock market... Why the banks are a "no-brainer" for today's investors... And why even their challenges prove their value. And now it looks like the Oracle of Omaha agrees. After doing very little through the COVID-19 crisis, Warren Buffett is finally buying a stock... Buffett's Berkshire Hathaway (NYSE: BRK-B) just revealed that it purchased 34 million shares of Bank of America (NYSE: BAC) at an average price of $24. That equates to an $816 million investment, which is a decent chunk of change even for Buffett. So investors should ask themselves the following... Is this $816 million all that Buffett intends to spend? Or will he get aggressive while bank valuations are at current levels? Buffett Loves the Big Banks This $816 million investment is not Buffett's initial purchase of shares of Bank of America. Far from it... He went into the COVID-19 downturn already owning a boatload of the stock. Now he is hungry for more. As of Berkshire's last required filing with the Securities and Exchange Commission (SEC) on March 31, Berkshire owned 900 million shares of Bank of America - a massive stock position that was then worth just a shade under $20 billion. And that isn't Buffett's only bank... As of March 31, he also held... 323 million shares of Wells Fargo (NYSE: WFC), worth $9.2 billion 57 million shares of JPMorgan Chase (NYSE: JPM), worth $5.1 billion 151 million shares of U.S. Bancorp (NYSE: USB), worth $5 billion 79 million shares of Bank of New York Mellon (NYSE: BK), worth $2.6 billion 9 million shares of PNC Financial Services (NYSE: PNC), worth $880 million 5.3 million shares of M&T Bank (NYSE: MTB), worth $550 million. Altogether, Buffett has more than $40 billion invested in shares of publicly traded American banks. Nobody is longer on the sector today than he is. SPONSORED Do you own gold? Somebody just decided to buy a lot of it... And I think I know why. Click here for details on a brand-new way to invest in gold. Historically Cheap Valuations I have been bullish on the banks in recent months for two specific reasons... Reason No. 1: Bank balance sheets were in phenomenal shape going into the COVID-19 crisis, and I believe they can comfortably withstand the hit they are taking. Reason No. 2: Their valuations aren't just cheap - they are historically cheap. I learned to value this magic combination by studying Warren Buffett himself... We can see that Bank of America is cheap by looking at how it is priced relative to its book value. (Book value is the total equity that Bank of America shows on its balance sheet.) In recent years, Bank of America has mostly traded at 1.2 times book value. Today, the bank trades at just 0.87 times book value. That means its stock price needs to increase 40% to get back to a normal valuation level. Most of the other major banks are similarly valued today. Some of them are even more undervalued... We are aware of Buffett's recent Bank of America purchase because he owns more than 10% of the shares outstanding and is therefore required to alert the market when he adds to his position. But soon, Berkshire will report on all of the stocks that the company owned as of June 30, 2020. At that time, we will be able to see whether or not Buffett has also been buying additional shares of the other banks that are already in his portfolio... Or whether he has been adding new holdings to his $40 billion-plus bet on American banks. So if you won't take it from me (though you should), take it from arguably the greatest investor of all time... You'd be hard-pressed to find a better deal today than American banks. Good investing, Jody Leave a Comment MORE FROM WEALTHY RETIREMENT A New Rule That Will Hurt Investors How an HSA Could Transform Your Retirement Why You May Outperform the World's Greatest Investor Facebook Twitter Email Share SPONSORED You Won't Believe Who We Found Inside This Dilapidated Warehouse Two men were just found inside this abandoned-looking Long Island building. One is the most famous TV personality of all time. The other is a money legend. More details here. You are receiving this email because you subscribed to Wealthy Retirement. Wealthy Retirement is published by The Oxford Club. Questions? Check out our FAQs. Trying to reach us? Contact us here. Please do not reply to this email as it goes to an unmonitored inbox. 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