Warren Buffett's Financial Stocks: Key Investments for 2025

Warren Buffett is known for his impressive investing skills. He stands as one of the wealthiest individuals globally, boasting a net worth of approximately $144 billion. His company, Berkshire Hathaway, is engaged in various industries, but it is particularly prominent in the financial services sector primarily due to its significant insurance operations.

It might surprise many to discover how crucial financial stocks are to Buffett's overall investment strategy. Currently, over 39% of his $296 billion Berkshire Hathaway portfolio is allocated to just 11 financial stocks.

Top Financial Stocks in Buffett's Portfolio

The most substantial financial investment in Buffett's portfolio is American Express (AXP -1.39%), which is Berkshire's second-largest holding, comprising 16.3% of its total interests. With a stake valued at over $48 billion, American Express is a significant player in Buffett's investment choices.

Bank of America (BAC 0.28%) follows closely behind, ranking as Buffett's third-largest holding. Berkshire Hathaway’s investment in this bank amounts to nearly $36.8 billion, representing 12.1% of its total portfolio.

Among the other financial stocks in Buffett's top holdings, Moody's (MCO 0.73%) ranks seventh, constituting 4.1% of the portfolio, while Chubb (CB 0.07%) occupies the ninth spot with a stake worth approximately $7.2 billion, making up 2.4% of the equity portfolio.

Citigroup (C -0.61%) is another major player in this lineup, with a substantial investment of around $4.5 billion, marking its presence as the only other financial stock exceeding 1% of Berkshire's total holdings. Other financial stocks like Visa (V 0.61%) and Mastercard (MA -0.14%) represent 0.9% and 0.7%, respectively. Capital One Financial (COF -0.24%) stands at 0.6%, while Ally Financial (ALLY -2.69%) and Nu Holdings (NU 1.23%) each comprise 0.4% of the portfolio.

In addition to these, Buffett has a minimal position in Jefferies Financial Group (JEF 0.45%), valued at about $32.6 million—practically negligible compared to the overall Berkshire portfolio at less than 0.1%.

Performance of Buffett's Financial Stocks

Several financial stocks in Buffett’s portfolio have shown remarkable gains over the last year. Notably, Jefferies' shares surged 88%, while American Express experienced a climb of approximately 70%. Other significant performers include Capital One, Citigroup, and Bank of America.

On the flip side, the worst performer in this set has been Ally Financial, which rose less than 10% in the last 12 months. Despite this limited growth, Ally offers an appealing valuation, showcasing a low forward price-to-earnings ratio of 8.5. Nevertheless, stocks like Citigroup, which trades at under 11 times forward earnings, also maintain reasonable valuations even after their price rises.

For income-focused investors, both Ally and Citigroup stand out. Ally boasts a forward dividend yield over 3%, while Citigroup presents a yield of 2.74%. In contrast, many of Buffett's other financial stocks yield less than 1%, with Nu Holdings not paying any dividends at all.

Analysts predict the most significant price increase over the coming year for Nu Holdings, with expectations for a nearly 22% upside based on consensus price targets. Other stocks like Bank of America, Chubb, Ally, and Jefferies are also projected to deliver double-digit gains.

Best Investment Choice

When considering the best long-term investment among these financial stocks, Buffett himself would likely point to American Express as the most promising pick. It is the only stock he has indicated plans to own indefinitely.

While I recognize several stocks, including American Express, as solid long-term investments, my personal favorite for 2025 aligns with Wall Street's view: it’s Nu Holdings. The digital bank leader in Latin America has shown rapid growth in both revenue and earnings, dominating the Brazilian market and presenting vast expansion opportunities in markets like Mexico and Colombia. Though income investors may overlook Nu, growth investors are expected to find it an attractive choice, particularly within Buffett's repertoire.

Buffett, Investing, Stocks