Warren Buffett's Berkshire Hathaway dumped part of its Visa and Mastercard holdings and increased its exposure to Nubank, the largest fintech bank in Brazil and one of the country's most prominent Bitcoin investors.
Warren Buffett – CEO Berkshire Hathaway
In a securities filing late on February 14, the industry group revealed that it purchased $1 billion of Nubank Class A stock 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 shift away from credit companies to reach out to their fintech rival.
Buffett, dubbed the "Oracle of Omaha," is known for his cautious approach to investing, especially in the hottest sectors of the market like fintech. The veteran investor has also decried emerging decentralized finance solutions such as Bitcoin, derisively deriding it as an asset that “doesn’t make anything.”
But Berkshire's new stake in Nubank shows that Buffett has recently become interested in fintech. Specifically, the company invested $500 million in this startup in July 2021. The return on said investment amounts to $150 million in December 2021 after Nubank's debut on the New York Stock Exchange (NYSE).
“Buffett-backed Nubank stock debuted on the NYSE during its IPO valuing the company at around $41.5 billion. The company raised $2.6 billion selling 289.15 million shares in its IPO. Berkshire bought 10% in the offering,” InvestorDesk tweeted .
So far, Buffett has not indicated his intention to sell his position at Nubank.
The connection between Buffett and Bitcoin
Buffett's additional investment in Nubank demonstrates his acknowledgment of the fundamental theme of the fintech sector, the digitization of financial services, as well as his willingness to partner with companies involved in the field. electronic money sector.
Specifically, Easynvest, a trading platform that Nubank acquired in September 2020 has been actively offering Bitcoin exchange-traded funds (ETFs) since June 2021. Called QBTC11, the ETF is backed by QR Asset Management and listed on the B3 stock exchange, the second oldest exchange in Brazil.
Therefore, it appears that Nubank, which still has exposure to the emerging crypto sector through Easynvest, can use these additional revenue opportunities to the benefit of its top investor. , regardless of Warren Buffett's view of Bitcoin as "rat poison".
That is mainly due to the growth of crypto-related investment products in 2021. Notably, their number doubled during the year, from 35 to 80 according to Bloomberg Intelligence data, while their total asset holdings reached $63 billion compared to $24 billion at the beginning of 2021.
Money inflows into crypto funds 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 digital assets could become a "meaningful source of income" for investment banking firms as the Bitcoin investment vehicle becomes mainstream than.
Meanwhile, Leah Wald, CEO of crypto asset management firm Valkyrie Investments, has predicted an increase in capital inflows into crypto-related investment vehicles, commenting that they become a “phenomeno-starter” take off” before adding:
“If you look at the capital inflow from a volume perspective, not only has it been stable even with Bitcoin’s notorious price corrections, but a lot of institutions have jumped in.”
Buffett's portfolio includes many crypto-loving companies
While Buffett may not invest directly in Bitcoin, he has indirect exposure 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 investment managers, noting that they have seen an increase in demand from “fund service clients” over the past few years.
Similarly, in another announcement made in October 2021, Bank of America kicked off a crypto research initiative, citing “increasing interest by 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, asserts:
“Investing in Nubank can be seen as Buffett's way of supporting the fintech/crypto world without countering his criticisms of the past. The owner of Berkshire is currently supporting the digital currency ecosystem indirectly. Even indirect exposure is bound to increase the positive sentiment which could drive more investors into the space.”