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Financial Stocks Roundup: Buffett Likes Wells Fargo, Might Consider JPMorgan Chase


Financial stocks are faring better than the broader market today despite the election results in Europe.

After two straight sessions of declines, financial stocks are mixed, with some outperforming the S&P 500 (SPY) today. Bank of America (BAC) and Fifth Third Bancorp (FITB) lead the pack, with shares up 2.91% and 3% respectively. The Financial Sector Select SPDR ETF (XLF) gained 0.66% and the KBW Bank Index (^BKX) rose 1.19%.

This comes after heavy selling in earlier trading and the futures market. Equities in Europe and Asia reacted negatively to the election results in Europe. French and Greek voters firmly rejected the austerity message, putting European governments' credit into question. Hugh Hendry, the London-based hedge fund manager, thinks that the political climate in Europe is so bad that he fears "confiscation" of his and his clients' assets, also adding, "[W]e're a year away from the French fully nationalizing their banking system."

American International Group (AIG) shares are down 3% today as the Treasury Department sold 163.9 million shares of the insurer at $30.50. AIG bought back $2 billion of the $5 billion sale. The Treasury owned about 70% of AIG before the sale, which pares its share down to 58%. The government took a majority stake in AIG in 2008 after it suffered losses on mortgage pools that it insured. The government has pumped as much as $182.3 billion into the company, and after the sale, its stake in AIG is worth $39 billion.

Warren Buffett reassured Berkshire Hathaway (BRK-A) (BRK-B) shareholders that he is healthy and feeling "terrific" and his prostate cancer treatments are going fine. Again, Buffett remained silent on the name of his successor. A-class shares of his company are up 0.87% and B-class shares are up 1.31%.

During the shareholder meeting, Buffett told Andrew Ross Sorkin that he keeps Wells Fargo (WFC) stock in his personal portfolio, but not JPMorgan Chase (JPM).

"I actually bought Wells Fargo instead of JPMorgan," Buffett said (via Forbes). "My best ideas are all in Berkshire Hathaway, I can promise you. We have 400 million shares of Wells Fargo in Berkshire Hathaway and I like JPMorgan too, but Wells Fargo is easier to understand, we bought Wells Fargo in the first quarter, we bought it last year and a lot of years before. If I wasn't managing Berkshire Hathaway, and I was sitting on my own money, I would put a lot of money in Wells Fargo and some in JPMorgan too."

Twitter: @vincent_trivett
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