Warren Buffett has set alarm bells ringing on Wall Street
Citigroup's profits jumped by 25 per cent, beating analysts' expectations. The KBW Nasdaq Bank Index is close to an all-time high.
But not everyone is convinced that the good times are going to last.
Warren Buffett, the so-called Sage of Omaha, has been shedding his US bank holdings. At the start of the year, Buffett's Berkshire Hathaway sold about $US3.2 billion ($4.9 billion) of shares in American banks and financial companies.
Buffett sold about a $US1 billion stake in Citigroup, ditched shares worth more than $US2 billion in Bank of America and dropped some of its holdings in Capital One.
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'Berkshire has clearly been reducing its exposure to US bank stocks,' Larry Cunningham, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, says.
'That activity signals a cautious or even bearish outlook on banking.'
Moves of this size are not unusual for Berkshire Hathaway. But Buffett, arguably the most successful investor of all time, has a reputation for being preternaturally gifted at foreseeing market trends.
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