Buffett bets on fintech future with $220 million Fiserv stake

Buffett bets on fintech future with $220 million Fiserv stake

Warren Buffett's Berkshire Hathaway has placed a $220 million bet on the prospects of a rosy future for banking technology firms by snapping up 4.4 million share in US financial processing firm Fiserv.

The investment, revealed in a regulatory filing with the Securities and Exchange Commission, anticipates a steady run of business for fintech companies operating in the transaction processing space.

With a share price of $51.01, Fiserv stock trades at just over 15 times earnings, and has underperformed the S&P 500 over the past year.

The Sage of Omaha is known to favour companies promising boring but steady returns. The transaction processing business may not be glamorous, but it is one of the few core banking activities to have emerged relatively unscathed from the market downturn.

Nonetheless, Buffett's investment has banking analysts scratching their heads, since it appears to run contrary to forecasts for further market-wide consolidation in the US banking industry - a prospect which would ultimately hit Fiserv's prospects.

Nor was Berkshire Hathaway the only investment firm fillings its boot on Fiserv stock. Brave Warrior Advisors also bought more than a million shares during the quarter, a stake valued at around $54 million.

Fiserv is not the only transaction processing firm attracting investor attention. Competitor FIS recently emerged as a target for a leveraged buyout by Blackstone and existing stakeholders Thomas H Lee Partners and TPG Capital. The PE firms are understood to have offered more than $15 billion, or around $32 a share, but the talks broke down after the FIS board held out for a higher price.

Comments: (0)