Owning 10% of Wells Fargo would have subject oracular investor Warren Buffett’s Berkshire Hathaway to increased federal regulations — something he apparently doesn’t want. So Buffett sold 9 million shares of his Wells Fargo holdings for about a half a billion dollars — but not because Buffett doesn’t have confidence in Wells Fargo. Berkshire was very clear in stating its reason for the sales: “they are solely motivated by the desire to return to a percentage ownership below the 10% notification threshold under the Change in Bank Control Act of 1978 and Regulation Y.” Berkshire said it had multiple discussions with the Federal Reserve about the matter.
Berkshire’s holdings in Wells Fargo are being reduced, not dumped. The overt explanation about why Berkshire is selling the shares is meant to allay suspicions that Berkshire is down on Wells Fargo as a result of the bank’s 2016 fraud scandal that got CEO John Stumpf removed. In November Buffett himself called Wells Fargo a “great bank that made a terrible mistake.”