Warren Buffett’s group is selling shares in Visa and Mastercard and investing in a Bitcoin-friendly bank
Warren Buffett’s Berkshire Hathaway sold off some of its Visa and Mastercard holdings and increased its exposure to Nubank, Brazil’s largest fintech bank and one of the country’s best-known Bitcoin investors.
Warren Buffett – CEO of Berkshire Hathaway
In a stock announcement late on February 14, the industry group disclosure that it bought $1 billion worth of Nubank Class A shares in the fourth quarter of 2021. On the other hand, they sold $1.8 billion worth of Visa stock and $1.3 billion worth of Mastercard stock, signaling a move away from lending firms towards their fintech rival.
Dubbed the “Oracle of Omaha,” Buffett is known for his cautious approach to investing, particularly in the market’s hottest sectors like fintech. The veteran investor has also denounced emerging decentralized finance solutions like Bitcoin, derisively deriding it as an asset that “doesn’t do anything.”
But Berkshire’s new stake in Nubank shows Buffett’s interest in fintech of late. Specifically, the company invested $500 million in this startup in July 2021. The return on this investment is $150 million in December 2021 following Nubank’s debut on the New York Stock Exchange (NYSE).
“Buffett-backed Nubank shares debuted on the NYSE during its IPO, valuing the company at around $41.5 billion. The company raised $2.6 billion and sold 289.15 million shares in its IPO. Berkshire bought 10% of the offering,” InvestorDesk tweets.
So far, Buffett hasn’t announced his intention to sell his position in Nubank.
The connection between Buffett and Bitcoin
Buffett’s additional investment in Nubank demonstrates his appreciation of the fintech sector’s fundamental theme, the digitization of financial services, as well as his willingness to partner with companies active in the electronic money space.
Notably, Easynvest, a trading platform that Nubank acquired in September 2020, has been actively offering Bitcoin exchange-traded funds (ETFs) since June 2021. The ETF, dubbed QBTC11, is backed by QR Asset Management and is listed on the B3 stock exchange, Brazil’s second-oldest stock exchange.
Therefore, it appears that Nubank, which still has exposure to the burgeoning crypto sector via Easyinvest, can use these additional revenue opportunities to its top investor’s advantage, despite Warren Buffett’s view that Bitcoin is “rat poison.”
This is mainly due to the growth of crypto-related investment products in 2021. Notably, their number doubled from 35 to 80 over the year, according to data from Bloomberg Intelligence, while their total wealth reached $63 billion, compared to $24 billion at the start of 2021.
Inflows into crypto funds set to double in 2021 | Source: Bloomberg Intelligence
Emily Portney, Chief Financial Officer of Bank of New York Mellon Corp. — another company in Buffett’s portfolio, notes that if the Bitcoin investment vehicle goes mainstream, digital assets could become a “meaningful revenue stream” for investment banking firms.
Meanwhile, Leah Wald, CEO of crypto asset management firm Valkyrie Investments, has predicted a surge in capital inflows into crypto-related investment vehicles, commenting that they are becoming a “phenomenon starter startup,” before adding:
“If you look at capital inflow from a volume perspective, not only has it been stable despite bitcoin’s infamous price corrections, but many institutions have stepped in.”
Buffett’s portfolio includes many crypto-loving companies
While Buffett may not be directly invested in Bitcoin, he is indirectly exposed as the companies in his portfolio enter the crypto space.
For example, in October 2021, just a month before bitcoin hit its all-time high of $69,000, the fifth-largest US bank, US Bancorp, introduced crypto custody for its institutional asset managers and found that they were seeing demand for bitcoin increasing.” Fund service customers” in recent years.
Similarly, in another October 2021 announcement, Bank of America launched a crypto research initiative, citing “increasing interest from institutions.”
Months ago, BNY Mellon announced it would hold, transfer, and issue bitcoin and similar cryptocurrencies to its wealth management clients.
Greg Waisman, co-founder and COO of crypto wallet service Mercuryo claims:
“The investment in Nubank can be seen as Buffett’s way of supporting the fintech/crypto world without countering his criticism of the past. Berkshire’s owner currently supports the digital currency ecosystem indirectly. Even indirect exposure is bound to add to the positive sentiment, which could drive more investors into the space.”
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