Warren Buffett Sold 2.6 Million Shares of Capital One in Q2: Should Investors Be Concerned?

Core Viewpoint - Berkshire Hathaway's recent sale of 21% of its stake in Capital One raises questions about potential warning signs for investors, especially given the stock's significant recovery and current valuation [1][4]. Group 1: Berkshire Hathaway's Investment in Capital One - Berkshire Hathaway purchased nearly $1 billion in Capital One shares during a market downturn in early 2023, acquiring them at approximately$101.76 per share [2]. - The initial purchase indicated that Berkshire did not foresee an imminent recession, as the stock was trading at nearly a 10% discount to its tangible book value, contrasting with its historical average of a 17% premium [3]. Group 2: Recent Sales and Market Conditions - Berkshire Hathaway has been selling off various positions, including half of its Apple stock and shares in Paramount and Snowflake, leading to speculation about Buffett's outlook on the stock market [4]. - Capital One's stock has increased by 38% since last November and is currently trading at a 24% premium to its tangible book value, which is higher than its historical trading range [4]. Group 3: Capital One's Financial Performance - Capital One has experienced rising credit card loan delinquencies, with the net charge-off rate increasing from 4.41% in Q2 last year to 6% this year, and $2.6 billion in loans charged off during the quarter [5]. - Despite the challenges, Capital One's 30-day delinquency rate improved to 4.17$35 billion merger with Discover Financial Services, which could create a competitive closed-loop payment network [7].