Warren Buffet's Berkshire reveals new $3 billion stake in Citi, exits Wells Fargo

• Berkshire Hathaway became the fourth-largest shareholder in Citi

• Citi shares are down 38% over the past 12 months, most among major Wall Street banks

Citigroup Inc (NYSE: C) on Tuesday jumped nearly 8.5% after billionaire investor Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK-A) disclosed a new stake of $3 billion in the New York-based bank.

Berkshire bought nearly 55.2M shares, amounting to 2.8% of Citi's outstanding share, in the quarter ended March 31, making the investment firm the fourth-largest shareholder in the bank.

The investment came as Buffett took advantage of a 5% pullback in the share price following a slide in the US banks on fears of deceleration of economic growth.

Citi is undergoing an overhaul led by CEO Jane Fraser as the bank was lagging behind the financial performance of its peers.

However, the new investment may boost confidence in the battered stock, which has slumped 38% over the past 12 months, the most among major Wall Street banks.

Warren Buffett is a prominent proponent of investing in so-called value stocks - assets trading below their intrinsic value.

In the SEC filing, Berkshire also disclosed that it has exited its 33-year-old investment in Wells Fargo & Co (NYSE: WFC) and deployed its cash to build stakes in Ally Financial Inc (NYSE: ALLY), chemicals and speciality materials company Celanese Corp (NYSE: CE) and drug distributor McKesson Corp (NYSE: MCK) among others, lifting their shares.

Picture Credit: MarketWatch

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