Warren Buffett’s Berkshire Hathaway sold a portion its Visa and Mastercard holdings to increase exposure in Nubank. Nubank is Brazil’s largest fintech bank and is also popular with Bitcoin investors.
The industrial conglomerate revealed in a securities filing that it purchased $1 billion of Nubank Class A stock during Q4/2021. It sold Visa stock in the amounts of $1.8 billion and $1.3billion, respectively, which indicates a shift away credit companies to be more visible among their fintech competitors.
Buffett, also known as the “Oracle of Omaha”, is well-known for his prudent approach to investing, especially in the most volatile sectors of the market, such as fintech. Buffett also dismissed emerging decentralized finance options like Bitcoin (BTC) as an asset, claiming that it “doesn’t create anything”.
Berkshire’s stake in Nubank is a sign that Buffett is softening his stance on fintech. The firm had invested $500m in the startup in July 2021. After Nubank’s debut on the New York Stock Exchange (NYSE), in December 2021, the firm earned $150 million on that investment.
Nubank stock, $NU Buffett’s stock, is set to debut at the NYSE as IPO pricing values company at $41.5 billion. With the sale of 289.15 million shares in IPO, the company raised $2.60 Billion. Berkshire bought 10% of the shares in the offering.#fintechnews pic.twitter.com/HTujZZvCtJ
— December 9, 2021, InvestingDesk (@InvestingDesk).
Buffett has so far not indicated any desire to sell Nubank’s position.
The Buffett-Bitcoin link
Buffett’s investment in Nubank is an additional sign of his recognition of the core theme of the fintech industry: digitization of financial services. He also indicated his willingness to work with companies involved in cryptocurrency.
Easynvest, which Nubank purchased in September 2020, has been offering a Bitcoin exchange traded fund (ETF), since June 2021. The ETF, named QBTC11 by QR Asset Management, is listed on Brazil’s second-oldest stock exchange, B3.
It appears that Nubank, although it is still exposed to the emerging crypto industry via Easynvest could benefit from the additional revenue opportunities. This is despite Warren Buffett’s views that Bitcoin was “rat poison squared.”
This is due to the rise of crypto-related investment options in 2021. According to Bloomberg Intelligence data their numbers increased by twofold in the past year, going from 35 to 80. The total assets held was $63 billion, compared with $24 billion at 2021’s start.
In 2021, the amount of cash flowing into crypto funds doubled. Source: Bloomberg Intelligence
Emily Portney, Chief Financial Officer at Bank of New York Mellon Corp. – another firm in Buffett’s investment portfolio — noted that digital assets could be a “meaningful source of income” for investment banks firms as Bitcoin investment vehicles become more mainstream.
Related: Bitcoin’s 30% Recovery in Two Weeks has BTC Whales Back in Accumulation Mode
Leah Wald (chief executive at crypto-asset manager Valkyrie Investments) predicted an increase of capital flows into crypto related investment vehicles. She said they have become “phenomenons that are starting to take off.” Wald:
“If you view inflows in terms of volume, you will see that it has been steady even through the price corrections Bitcoin is famous for. However, you can also see a lot more institutions jumping in.”
Buffett’s portfolio is full of crypto-loving businesses
Although Buffett may not be able to invest directly in Bitcoin, he is already getting indirect exposure when companies in his portfolio make a foray into this sector.
In October 2021, just a few months before Bitcoin hit its all-time high at $69,000, the fifth-largest U.S. Bank, U.S. Bancorp launched a cryptocurrency custody system for institutional investors. They noted that they had seen an increase in demand from clients who use their fund services over the past few years.
In a similar announcement, Bank of America made another October 2021 announcement, citing “growing institution interest” in a cryptocurrency research initiative.
BNY Mellon had announced months earlier that it would issue, transfer, and hold Bitcoin and other cryptocurrencies for clients in asset management.
BNY Mellon Digital Assets unit was established. This team is dedicated to creating the first multi-asset custody platform and administration platform for digital and traditional assets. https://t.co/aZ7wMfAXqg pic.twitter.com/L54TFVpJNv
— BNY Mellon (@BNYMellon), February 11, 2021
“The Nubank investment could be tagged as Buffett’s way to support the fintech/crypto industry without taking back his critics from the past,” stated Greg Waisman (co-founder and COO) of Mercuryo crypto wallet service. He also said that the Berkshire boss is now supporting the “digital currency ecosystem indirect.”
“Even indirect exposure will increase investor interest in the space. You should do your research before making any investment or trading decision.
com. You should do your research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
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