Citigroup shares are up 7% after Warren Buffett announced a nearly $3 billion stake in the troubled bank

Warren Buffett, Chairman and CEO of Berkshire Hathaway.

Andreas Harnik | AP

The 91-year-old “Oracle of Omaha” snapped up Citi stock as it underperformed the rest of the financial sector over the past 12 months. The stock is down nearly 40% while the Financial Select Sector SPDR Fund is down 12% over the same period.

A year ago, Citi welcomed Jane Fraser as its new CEO, the first woman to run a major US bank. It has set a medium-term target of 11% to 12% for return on tangible equity to overtake a company that has lagged far behind its U.S. peers for years.

Fraser has chosen to exit less profitable parts of the company’s global empire, including exiting 13 retail markets in Asia and Europe.

Citi now joins some of those competitors in Buffett’s portfolio. Berkshire owned $41.6 billion in Bank of America at the end of March, making it its second-largest holding after Apple. Berkshire has owned Bank of American since 2017.

Berkshire built a new $390 million stake in Ally Financial. The stock rose 4% in premarket trading on Tuesday after the announcement.

The conglomerate also held stakes in Bank of NY Mellon, US Bancorp, Mastercard and Visa. The conglomerate exited its position in Wells Fargo in the first quarter.

https://www.cnbc.com/2022/05/17/citigroup-shares-jump-5percent-after-warren-buffett-reveals-a-near-3-billion-stake-in-the-struggling-bank.html Citigroup shares are up 7% after Warren Buffett announced a nearly $3 billion stake in the troubled bank

Gary B. Graves

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