Warren Buffett’s Investment in Crypto-Friendly Nubank Rakes in $130 Million Profits in 2023
Despite Warren Buffett’s famously skeptical stance on cryptocurrencies, his Berkshire Hathaway firm is reaping substantial gains from its stake in a crypto-friendly bank this year.
The “Oracle of Omaha” acquired 107 million shares of Nu Holdings, the parent company of Brazil-based fintech firm Nubank, in two separate transactions during 2021. Berkshire Hathaway initially invested $500 million in Nu Holdings in June 2021 and then added another $250 million to its stake in December of the same year. As of the second quarter of 2023, the company has held onto its entire position without selling any Nu shares.
Year-to-date, Nu’s share price has surged by almost 106%. This means that Buffett’s initial $750 million investment is now valued at approximately $879.50 million. It’s worth noting that at its peak in February 2022, the position was worth well over $1 billion.
What Makes Nubank Crypto-Friendly?
Nubank has earned its “crypto-friendly” label due to the crypto-related services it offers to more than 1.35 million users. Thus, investing in Nubank can be perceived as an indirect exposure to the cryptocurrency industry. This includes Easynvest, a trading platform offering a Bitcoin exchange-traded fund (ETF) product, and Nubank’s digital financial services platform, which provides BTC and Ether (ETH) trading options. Nubank has also ventured into the world of blockchain by launching a loyalty token on the Polygon network.
Moreover, in May 2022, Nu Holdings allocated 1% of its cash reserves to Bitcoin, expressing the company’s strong belief in Bitcoin’s potential to disrupt financial services in the region.
Nu’s Remarkable Performance
Nu, the largest fintech bank in Latin America with over 80 million customers in Brazil, has outperformed some of Berkshire Hathaway’s other top holdings. For instance, Amazon and Apple stocks have risen by 54.65% and 36%, respectively, this year. Apple remains the largest holding in Berkshire Hathaway’s $354 billion investment portfolio, accounting for approximately 45% of the total.
Even more impressively, Nu’s stock performance has surpassed that of Berkshire Hathaway itself, which has experienced a 9.25% increase year-to-date.
Bitcoin’s Rally to Match Nu’s Success
In an intriguing turn of events, Bitcoin’s price has now caught up with the remarkable performance of Nu’s stock in 2023. Bitcoin’s year-to-date gains are also at 106%, coinciding with the “Uptober” surge and the recent excitement surrounding Bitcoin ETFs.
Notably, Bitcoin’s rapid ascent to align with Nu’s stock performance in recent weeks has occurred alongside its apparent decoupling from the stock market, particularly in the month of October. However, some analysts suggest that the surge in Bitcoin prices might be primarily attributed to optimism surrounding Bitcoin ETFs.