Warren Buffett and Berkshire Hathaway have significantly trimmed their position in Wells Fargo, selling 100 million shares. The Omaha Oracle continues to expand its position in bank stocks, fueling the bullish thesis on gold and bitcoin (BTC).
Berkshire reportedly held Wells Fargo shares worth $ 32 billion at one point, Fox Business reported Sept. 5. The investment conglomerate now owns 3.3% of the lender’s shares, valued at just $ 3.36 billion..
Why did Buffett cut Wells Fargo and how could this benefit Bitcoin?
During his career Buffett highlighted the importance of value investing and cash flow. The investor usually prefers companies with predictable and stable business processes that result in constant profitability.
In July, Wells Fargo posted a loss of $ 2.4 billionAfter the disappointing quarterly report, the company announced that it would cut the dividend to 10 cents per share.
This month Moody’s downgraded the rating from stable to negativeciting his government’s slow review process. Allen Carpenter, an analyst at Moody’s, said:
“The shift in perspective reflects Wells Fargos’ slower than expected pace in addressing its deficiencies in managing its heritage in terms of governance, oversight, compliance and operational risk management. The slow pace is weighing on and undermining its spending base, plus its earning potential in the context of difficult operating conditions . “
The coincidence of the quarterly loss, dividend cut, and the prospect of a downgrade likely prompted Buffett to trim his position.
However, the ongoing theme of the Berkshire portfolio restructuring over the past few months has been the investment in Barrick Gold. While his exposure to the US banking sector declined, Buffett invested in gold and Japanese trading companies.
The decision shows that Buffett strives for security around cash flow and a hedge against inflation. The investment in Barrick Gold drives the bullish thesis on Bitcoin because lThe perception of BTC as a store of value is improving, especially given the close correlation between the two since fall March 2020.
Bitcoin price versus gold. Source: Skew
Bitcoin will “cannibalize” gold in the future, says Winklevoss
Other notable investors, including the Winklevoss twins, believe that Bitcoin as “digital gold” would compete with gold in the long term. In particular, its immense upside potential makes it an attractive investment as Btcoin’s market cap is still only around 1.5% of gold.
Gemini co-founder Cameron Winkelvoss said that Bitcoin has already made up a lot of ground with gold. Said as:
“Bitcoin has gained a lot of ground compared to gold: from a white paper to a market cap of more than $ 200 billion in less than a decade. It will continue to exploit gold dramatically over the next decade. “
As Cointelegraph Markets reported on Monday, the Wall Street veteran and Keizer report host Max Keizer, thinks that Buffett’s exit from the dollar is a bullish signal for the price of gold and bitcoin.
“Buffett’s move to Japan and his investment in gold confirm that it is largely leaving the dollar,” he said. “”Bitcoin, gold and silver are making new short-term all-time highs“.
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