Warren Buffet's Investment in Crypto-friendly Bank Yields High Profits Amidst Bitcoin Surge
Summary:
Despite Warren Buffett's skeptical stance on cryptocurrencies, his 2023 investment in the crypto-friendly Brazilian fintech, Nu Holdings, garnered significant profits. Nu's share price increased by almost 106% Year-to-Date (YTD), ballooning Buffett's initial $750 million into approximately $879.50 million. Berkshire Hathaway, Buffett's firm, has not sold any of its Nu shares since first purchasing them in 2021. Bitcoin's price performance has also seen a similar rise, prompting speculation on the impact of Bitcoin ETFs on its value.
Despite Warren Buffett's infamous dismissal of cryptocurrencies and Bitcoin (BTC) as essentially worthless, his investment in a crypto-friendly banking establishment has yielded considerable profits in 2023. Buffett, also known as the "Oracle of Omaha", obtained a significant number of shares in Brazilian fintech company Nu Holdings, which also runs the crypto-friendly Nubank, via his corporation, Berkshire Hathaway, in two different 2021 transactions.
In June 2021, Berkshire Hathaway poured $500 million into Nu Holdings, and then increased its investment by $250 million in December of that same year. As the second quarter 2023 earnings report confirms, the firm has held onto every single share it bought.
As of now, Nu's share price has seen an impressive boost of almost 106% since the start of the year. This surge means that Buffett's initial $750 million investment has ballooned to an estimated $879.50 million, provided Berkshire hasn't sold any of its shares in Nu Holdings yet. The value of this investment even hit a peak of over $1 billion in February 2022.
Nubank has earned its 'crypto-friendly' reputation thanks to some of its sub-brands extending cryptocurrency-related services to their 1.35 million users. This explains why an investment in Nubank can be seen as indirect exposure to the cryptocurrency sector.
Crypto offerings from Nu Holdings include Easynvest, a trading platform that features a Bitcoin ETF product, and Nubank's digital platform that facilitates the trading of BTC and Ether (ETH). Additionally, Nubank released a loyalty token on the Polygon blockchain, and in May 2022, Nu Holdings earmarked 1% of its cash holdings for Bitcoin. By doing so, Nubank underscored Bitcoin's viability as a potential game-changer in the region's financial services industry. Currently, Nubank has more than 80 million customers in Brazil, making it Latin America's biggest fintech bank.
Buffett's other major investments -- Amazon and Apple -- have not performed as well as Nu Holdings, with returns of 54.65% and 36%, respectively. Apple constitutes the largest portion of Berkshire Hathaway's investment portfolio as of September 2023, encompassing about 45% of its $354 billion worth.
Interestingly, Nu Holdings' stock performance has outdone Berkshire Hathaway’s own stock, which has seen a 9.25% increase since the start of the year.
Bitcoin's price performance has also matched the price gains of Nu stock this year, with BTC also showing a 106% rise since the beginning of the year. The upswing in Bitcoin's value aligns with the excitement surrounding the recent launch of a Bitcoin ETF.
Interestingly, Bitcoin has shown growth independent of the stock market this October. While this is typically a sign of strength, some analysts suggest Bitcoin's price hike may be the result of optimistic expectations about the Bitcoin ETF.
This report does not provide any investment advice or recommendations. Investing and trading carry inherent risks, and it is advisable for investors to carry out their own thorough research before making any decision.
Published At
10/31/2023 12:17:19 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.