Berkshire Hathaway (BRK.A : NYSE : US$126531.00)
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In an interview with Bloomberg Television, Warren Buffett said that Wells Fargo’s dominance of the U.S. mortgage market should pay off as the housing market rebounds. Buffett said, “They’ve got a sensational mortgage operation. The total mortgage market was at the $3-trillion level not that long ago. If it goes back up to $3 trillion, I hope Wells is doing a third of those.”
In the first quarter of 2012, Wells Fargo created one of every three mortgages in the U.S., and is looking to boost its market share to 40%. Additionally, the company said that the number of applications set a new quarterly high during the most recent three months. Buffett believes Wells Fargo is outpacing its competitors because it managed to successfully navigate the housing crisis. “Wells did the best job of the big players in the mortgage market and therefore they’ve garnered a share as the other fellows have fallen by the wayside.”
Buffett’s Berkshire Hathaway has built its stake in Wells Fargo to over 7%, according to Bloomberg, adding to its position earlier this year. In addition to the Wells Fargo investment, Buffett’s other bets on the housing market include the purchase of a brickmaker, the expansion of Berkshire’s real estate brokerage and the purchase of commercial property through a company jointly owned with Lecadia National Corp.