This Is Why Warren Buffett Says It's a "Great Time to Be in Banking"
If you were listening carefully to Warren Buffett on CNBC one month ago today, you heard him say, "This is a great time to be in banking."
It may not have made sense to you then, but it should today.
Wells Fargo shares soared 31.7 percent today (Thursday) after the bank announced before the opening bell that it expects to report a record $3 billion in earnings for its first quarter.
In a news release, Wells said, "Business momentum in the quarter reflected strength in our traditional banking businesses, strong capital markets activities, and exceptionally strong mortgage banking results."
At the closing bell, the stock was up $4.72 to $19.61 a share.
As of the end of December, Buffett's Berkshire Hathaway owned almost seven percent of Wells Fargo's stock. That's over 290 million shares. (It may have bought, or sold, shares since then.) It's the single biggest shareholder.
Right now, Berkshire's stake in Wells Fargo is worth almost $1.4 billion more than it was worth just 24 hours ago.
Back on March 9, Wells Fargo stock opened at $8.65.
"The spreads have never been wider. This is a great time to be in banking, you know, if you just get past the past and they are getting past the past. I mean, right now every time a loan is made to somebody to buy a house--and we're making, you know, making millions of loans--four and a half million houses will change hands this year out of a total stock of less than 80 million. So those people are making good mortgages. You want those assets on your books and you get a great spread in putting them on now. So it's a great time to be in banking, but you do have to get past this past."
Today, Berkshire's stake in Wells Fargo is worth $3.2 billion more than it was when Buffett spoke those words.
Current Berkshire stock prices: