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Berkshire Hathaway chief Warren Buffett called out bank stocks as one of his favorite equity holdings in the U.S. market.
“I feel very good about the banks we own. They’re very attractive compared to most other securities I see,” Buffett told CNBC’s Becky Quick on “Squawk Box” on Monday.
Banks are a big part of Berkshire Hathaway’s portfolio, which is worth more than $248 billion.
Goldman Sachs, JPMorgan Chase, Bank of America, BNY Mellon, and U.S. Bancorp were all among Berkshire’s 15 largest stock holdings.
“Banking is a good business if you don’t do dumb things on the asset side, I mean, basically,” Buffett said. “The banks we own earn between … 12% and 16% or so on net tangible assets. That’s a good business, that’s a fantastic business against the long-term bond at 2%.”
Buffett highlighted banks buying back stock as a top reason for why he likes the sector. For example, Bank of America “is buying in a lot of stock every year,” Buffett said, “so our ownership of Bank of America this year will probably go up 7 or 8% without us spending a dime.”
“I’d like to own any business, any good business, where my ownership just goes up 7 or 8% every year without me spending any money and, on top of it, I get a dividend,” the Berkshire chairman and CEO added in the interview from the conglomerate’s headquarters in Omaha, Nebraska.
— CNBC’s Fred Imbert contributed to this report.
Correction: An earlier version misstated Buffett’s title. He is chairman and CEO of Berkshire Hathaway.
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