Buffett May Have Severed Citigroup Ties
Feb 15 1:09pm ET
NEW YORK (Reuters) - Warren Buffett, one-time savior of Salomon Brothers, may have ended his 15-year association with the Wall Street firm and its successor, financial giant Citigroup Inc. .
Buffett's insurance and investing conglomerate Berkshire Hathaway Inc. listed no Citigroup holdings in its latest regulatory filings on Thursday, describing his stock investments at the end of last year. It listed 2.7 million Citigroup shares, worth about $110 million, the previous quarter.
The stake is minuscule in Buffett's $28 billion stock portfolio, but it's significant because the Oracle of Omaha, Nebraska and the world's No. 1 financial services company go way back.
Buffett's stake in Citigroup began with his $1 billion investment in Wall Street firm Salomon Brothers in 1987, when he helped rescue the firm as it was under a takeover threat from corporate raider Ronald Perelman and hurting from bond losses and the stock market crash.
In 1997, Buffett got shares in Travelers, as Citigroup Chief Executive Sanford "Sandy" Weill's insurance firm bought Salomon. A year later he got Citigroup shares as Travelers merged with Citicorp to create Citigroup, the world's No. 1 financial services firm.
Buffett has been reducing his Citigroup stake over several years. At the end of 1999 he listed holdings of about 8 million shares valued at $449 million -- 12 million shares when adjusted for a subsequent three-for-two stock split.
The latest filing could mean Buffett sold his remaining stake in the fourth quarter, though the billionaire investor does not have to disclose all his holdings, and often makes omissions in filings with the Securities and Exchange Commission.
If Buffett did sell the shares, Weill lost the support of one of the most influential investors in the world.
A Buffett spokeswoman was not immediately available for comment.
Talk of losing support from Buffett -- the world's second richest man -- comes at a difficult time for Weill's Citigroup. It has about $650 million in exposure to Enron Corp. , the collapsed energy trader, and has been criticized for making loans to the firm. It has also written off hundreds of millions of dollars in investments in Argentina, as the country wrestles with an economic crisis.
With 2.74 million shares last year, Buffett owned only 0.05 percent of Citigroup's 5.1 billion outstanding shares. He would have reaped $110 million to $140 million if he sold the stock, depending on when he sold it in the quarter.
The Citigroup stake was also only a small part of Berkshire Hathaway's $28 billion stock holdings. The firm also has about $35 billion in bonds and owns more than 40 companies outright. It has about $155 billion in overall assets.
Although known as a "buy and hold" investor, Buffett does jettison stocks from time to time. Three years ago he dumped his multibillion dollar investment in Walt Disney Co. and a year later dropped stock in mortgage giant Freddie Mac .
Citigroup shares fell $1.50, or 3.3 percent, to $44.05 on the New York Stock Exchange in early afternoon trading. |
