Warren Buffett’s Berkshire Hathaway “significantly cut its stakes in some of the largest U.S. banks in the second quarter, selling billions of dollars’ worth of stock in Wells Fargo, JPMorgan Chase and other financial institutions.” This according to an article in the Financial Times.

The article notes, “The Covid-19 pandemic has forced US banks to take billions of dollars in provisions for future credit losses,” adding, “The 15 largest banks alone have set aside $76 billion since the crisis began.” Further, it explains that Fed intervention has pushed down rates to nearly zero, “compressing banks’ lending margins as loan pricing falls faster than their already low financing costs.”

According to the article, Berkshire stock has dipped by 6.9% this year in large part due to its heavy exposure to financials—lagging the over 4% return in the broader market. At Berkshire’s virtual shareholder meeting in May, Buffett explained, “In 2008 and 2009, our economic train went off the tracks. And there were some reasons why the roadbed was weak, in terms of the banks and all that. This time we just pulled the train off the tracks and put it on a siding.” Regarding his outlook for the markets going forward, Buffett said, “This is quite an experiment” and “we may not know the answers to some very important questions for many years. It still has an enormous range of possibilities.”