Buffett's Berkshire adds Synchrony, sheds GE

NEW YORK (Reuters) - Warren Buffett’s Berkshire Hathaway Inc on Monday said it added a stake in Synchrony Financial, boosting its bet on the credit card industry, and shed its investment in the company’s former parent, General Electric Co.

Warren Buffett, chief executive officer and chairman of Berkshire Hathaway Inc, arrives at a National Auto Dealers Association event in New York in this file photo dated March 31, 2015. REUTERS/Brendan McDermid

The changes were among those disclosed in Berkshire’s quarterly report of its U.S.-listed stock holdings.

Berkshire said it owned 17.5 million shares of Synchrony, a private label credit card issuer split off from GE in 2014, worth about $521 million as of June 30.

It was already the largest investor in American Express Co, owning about one-sixth of that card issuer.

Synchrony shares rose 4.6 percent in after-hours trading, likely reflecting what investors consider Buffett’s imprimatur.

Smaller equity investments for Berkshire are normally made by Buffett’s deputies, Todd Combs and Ted Weschler, while Buffett focuses on bigger bets such as American Express, Apple Inc and Wells Fargo & Co.

It is unclear who sold the GE investment, which was worth roughly $315 million at the end of March.

Berkshire’s assistant did not immediately respond to a request for comment.

Synchrony’s share price has yet to recoup the 16 percent decline it suffered on April 28 after it wrote off more soured loans, causing profit for the Stamford, Connecticut-based company to fall short of forecasts.

Berkshire may have viewed that as “an opportunity to load up,” Colin Plunkett, a Morningstar Inc analyst who covers Synchrony, said in an email.

He said Synchrony remains undervalued, with a low degree of leverage, and “really has a big opportunity to return cash to shareholders.”

Synchrony did not immediately respond to a request for comment.

In the second quarter, Berkshire trimmed its stakes in American Airlines Group Inc, Delta Air Lines Inc and United Continental Holdings Inc, and boosted its stakes in Bank of New York Mellon Corp and General Motors Co.

It also nearly eliminated a decade-old investment in Wabco Holdings Corp, which supplies commercial vehicle parts.

Berkshire boosted its stake in Liberty Media Corp and reduced its holdings of Sirius XM Holdings Inc, both investments linked to billionaire John Malone.

Buffett and Malone have explored a large investment in U.S. phone company Sprint Corp, people familiar with the matter said last month.

Reporting by Jonathan Stempel in New York; Editing by Phil Berlowitz