Shares of Capital One Financial Corp. erased losses incurred in the last two weeks, after billionaire investor Warren Buffett's Berkshire Hathaway Inc disclosed it had taken a stake in the credit cards-focused bank.
In its quarterly disclosure, after the bell on Monday, Berkshire said it had a stake of 9.92 million shares in the company. The stake would be worth $954 million, based on the closing price on March 31.
The bank's shares were trading up 6% at $94.09. As of Monday, they had lost around 15% since early March, in tandem with other financial stocks as the regional banking industry limped from one disaster to another.
Primarily a credit card issuer, McLean, Virginia-based Capital One also has a huge auto lending and commercial banking business. Its peers include American Express Co. and Bread Financial Holdings Inc.
Shares of most regional banks were also up, building on gains from a day earlier. PacWest Bancorp and Western Alliance Bancorp rose 4% and 5%, respectively.
A looming deadline to raise the $31.4 trillion debt ceiling pushed the debate in Washington to the forefront of investors' minds and shifted the focus away from lenders, fueling a "relief rally" in banking stocks on Monday.
The rally could also lead to a short squeeze. "With sentiment overly negative, we don't think it would take very much to drive a potential short squeeze here," Morgan Stanley analysts wrote in a note.
Some regional banks also received a vote of confidence from hedge fund manager Michael Burry, who rose to fame with his bets against the U.S. housing market before the 2008 financial crisis.
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