Citigroup shares jump 7% after Warren Buffett reveals a near $3 billion stake in the struggling bank

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Berkshire Hathaway Chairman and CEO Warren Buffett.
Andrew Harnik | AP

Citigroup shares got a boost from Warren Buffett who just disclosed a big stake in the struggling bank.

The bank stock jumped more than 5% in premarket trading after a filing revealed Monday evening that Buffett’s Berkshire Hathaway added more than 55 million shares to build a stake worth $2.95 billion as of the end of March.

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The 91-year-old “Oracle of Omaha” scooped up Citi shares while they have been underperforming the rest of the financial sector in the past 12 months. The stock is down nearly 40% while the Financial Select Sector SPDR Fund is off by 12% over the same period.

Citi welcomed Jane Fraser as its new CEO a year ago, the first female chief of a major U.S. bank. She has set a medium-term target of 11% to 12% for return on tangible common equity, aiming to overhaul a company that has deeply underperformed U.S. rivals for years.

Fraser has opted to exit less-profitable parts of the firm’s global empire, including leaving 13 retail markets across Asia and Europe.

Citi now joins some of those rivals in Buffett’s portfolio. Berkshire owned $41.6 billion of Bank of America at the end of March, marking its second biggest holding next to Apple. Berkshire has owned Bank of American since 2017.

Berkshire built a $390 million new stake in Ally Financial. The stock jumped 4% in premarket trading Tuesday after the disclosure.

The conglomerate also held shares in Bank of NY Mellon, U.S. Bancorp, Mastercard and Visa. The conglomerate exited its position in Wells Fargo in the first quarter.

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