Warren got pissed & sold WFC

I was thinking how Charlie held and said something like “I have lower expectations of management than Warren”

Great hold by Charlie

Questionable slash and burn by Warren


"One of Warren Buffett’s worst investment moves in an otherwise fabulous career was Berkshire Hathaway ‘s sale in 2020 of a big stake in Wells Fargo and two other large banks, JPMorgan Chase and Goldman Sachs Group .

Given the rally since then in those stocks, particularly Wells Fargo (ticker: WFC), Barron’s estimates that Berkshire Hathaway (BRK.A and BRK.B) has left about $15 billion on the table."


Subject to my old man memory: I think during this time Berkshire added 2 billion of Bank of A shares that are now about doubled. The state in Bank of A is about 12% if I am not mistaken.


I think that was well before this latest dump of Wells. My point was not to bash Warren but to contrast the expectations with Charlie. He was ultimately right.


Buffett’s mistake is that he didn’t need to sell WFC in order to buy BAC. But he did buy BAC during and after selling WFC, so that makes up some of the loss.

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If Wells Fargo stock drops, Buffett’s decision to sell will look smarter.

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The odd thing is that this isn’t the usual “it was dumb with hindsight” situation.
It was pretty obvious at the time that the price was likely to be quite a lot higher in a very reasonable time frame.
That line of thinking was posted here even before we were sure that the big sale was in fact WFC.

It was clear that even with their capped size they could make over $4 a share in most years,
so prices in the low to mid $20s would not last barring new unpleasant surprises.
So, why sell in the $20s something that you could almost certainly get $20/share more for pretty soon?

Since I have a certain belief that Mr Buffett isn’t a fool, there must be reasons for having sold so promptly at such a low price.

Some that come to mind:

  • Wanting to cut back on the overlarge bank exposure (that’s what he said, which is presumably at least part of the reason)
  • Wanting to be concentrate the smaller banking position in his new favourite: BofA
  • Thinking there was a decent chance of a new, big, lasting, and bad thing happening at Wells Fargo soon, so best to get out while you can.
  • Potential regulatory disapproval if he took too big a bite of BofA while still holding meaningful positions in others.
  • Once he decides to get out of a position because of lack of trust in management or whatever else,
    he just gets on with it, because anything else is potentially wishful thinking or short term market price prediction.

With my limited knowledge, none of these seem to be obviously good enough reasons to leave so many easy billions on the table.
So I have tended to agree with the notion that if Mr Buffett made any bad calls during the pandemic, selling WFC too low would be it.

Though the “new bad news” speculation is something that makes you wonder.



Though you listed it last, I suspect lack of trust in management and BOD was the sole reason. Buffett has written and spoken countless times about the integrity and capability of management being a deciding factor in whether to invest in a business, even one with great economics.


Though you listed it last, I suspect lack of trust in management and BOD was the sole reason.

That does makes sense, though I think the nearly as big issue was the lack of good economic prospects with the ongoing asset cap.
But to me it neither clearly explains the urgency, selling when it was plainly trading for much less than any notion of fair value.

Unless management was seen as so untrustworthy there was a worry about something new, big, bad, and soon.
Tantamount to setting at least $7bn on fire, just to avoid something worse?



Tantamount to setting at least $7bn on fire, just to avoid something worse?

Here is how I think about this trade.

  1. He wanted to reduce his exposure to banks
  2. He wanted out of WFC
  3. He decided BAC was a solid alternative

Given this I wouldn’t say he ‘burned $7B’ - yes WFC was clearly undervalued, but so was BAC and he simply moved most of the WFC investment there. You could argue some of decision making didn’t work out as clearly #1 above was a mistake given the rally in financials; but that is a different line of thiking.