Warren Buffett Just Sold This Stock – But I Think He’s 100% Wrong

We recently took a look at Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) updated stock portfolio when the company filed its last quarterly statement. Some of these transactions were already well known, such as the sale of about half of its Apple investing and adding even more shares of Occidental Petroleum.

However, one move in particular that surprised me was the sale of part of Berkshire’s investment in Capital One Financial (NYSE: COF)Berkshire sold about 2.65 million shares of Capital One, representing a 21% reduction in its investment. Even after the sale, Berkshire still owns about $1.4 billion of the company. bank sharesSo it’s not as if Warren Buffett and his team have completely lost faith in the company. But it still surprised me, and not just because Berkshire only added Capital One to its portfolio for the first time about a year ago.

I often agree with Buffett’s decisions. For example, I think the recent sale of Apple was a smart move, for a number of reasons. But I have to say I disagree with him on this one. In fact, Capital One is at the top of my list of interesting bank stocks to buy right now.

Why I’m a Capital One fan

There are a few reasons why I’m a fan of Capital One. For starters, it’s a very profitable bank. Not only is Capital One a credit card-focused bank, it also focuses on products like online checking and savings accounts more than other major U.S. banks. This gives it a great cost structure. In fact, Capital One had a net interest margin of 6.70% in the second quarter. To put that in context, Bank of AmericaThe NIM stood at 2.41% during the same period.

I’m also a big supporter of the impending acquisition of Capital One. Discover financial servicesThe deal adds hundreds of millions of credit card accounts to Capital One’s portfolio, and most of the banks’ credit card products are complementary, meaning there is little overlap.

Additionally, once the deal is finalized, Capital One will have its own payments network. It will be able to use Discover’s network to process much of its debit and credit card volume and avoid paying interchange fees to Visa And MasterCardAdditionally, having your own payment network creates a multitude of future possibilities, such as becoming the processor for other banks’ credit card products.

Additionally, Capital One is a cheap The bank stock is trading at about 10% below book value (likely due to recession fears and the credit card industry), but it is remarkably cheap compared to most of its competitors.

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Why did Buffett sell?

It’s important to keep in mind that we have absolutely no idea why Berkshire decided to sell some of its Capital One shares. We don’t even know if this decision was made by Warren Buffett himself or by one of his investment managers.

That said, there are a few potential reasons I can think of. For one, most of Buffett’s recent stock moves seem to be in the direction of risk reduction, and that could certainly be the case here. After…