Warren Buffett inches further from banks

Andrew Harrer/Bloomberg

The Oracle of Omaha has been paring down his investments in banks, but it may not mean he's totally bearish on the industry yet.

Warren Buffett's Berkshire Hathaway is trimming down its equity position as it sells shares of Capital One and Bank of America , along with long-time favorites, like Apple (though the tech company is still the firm's largest holding). The conglomerate sold off about 15% of the value of its portfolio, which totaled $280 billion in the second quarter, down from $332 billion, according to public filings.

Still, the 93-year-old investment tycoon has stayed mum about Berkshire's recent moves to sell stakes in financial institutions. The transactions could just be pieces of a bigger strategy to shore up cash in preparation for acquisition opportunities if the economy turns, said Kevin Heal, a senior analyst at Argus Research.

"It might be a situation where [Buffett] is looking to scoop up a company that falls into distress, like Berkshire typically does," Heal said. "Maybe on Capital One, he's got some fears of credit card defaults rising, but I think it's more of a strategic teardown of equity exposure."

Berkshire and its chairman and CEO Buffett, often viewed as a North Star for value investors , sold off some $3.8 billion worth of Bank of America stock over the course of 12 days last month after the bank reported unexciting, yet consistent, earnings. Buffett first bought into the Charlotte, North Carolina company with a $5 billion investment in 2011 as an effort to restore stability to the banking sector following the financial crisis.

Buffett spoke publicly of treading lighter in the banking sector following the spate of failures last spring. His firm is still Bank of America's largest shareholder, with more than 900 million units of common stock, worth some $35 billion. Bank of America declined to comment.

Berkshire also cut its holdings in Capital One by more than 20% in the second quarter, just more than a year after first investing in the bank.

Vincent Caintic, a managing director at analytics firm and investment bank BTIG, said it may just be time to dump shares of banks that aren't churning out big profits, like Capital One and its credit card business. Caintic said the McLean, Virginia-based bank's performance is under pressure as it sees consumer spending slow down, credit quality get worse, competition tighten and acquisition limbo drag on as it waits to complete its Discover Financial purchase.

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"When I think about Capital One and just a lot of these consumer lenders, broadly, we were in a Goldilocks scenario," Caintic said. "We had very good consumer credit. We had spending that was really good. And all of those things are just moderating and getting worse…The earning growth power is getting worse."

Capital One declined to comment. Berkshire Hathaway did not respond to a request for comment.

Berkshire pulled in around $360 million for its Capital One shares, and still owns a stake valued at about $1.3 billion, at the bank's Thursday closing price of $137.11.

Capital One's pending acquisition of Discover is also clouding investors' rose-colored glasses. The deal isn't sure-fire, as community groups push back on the combination. While Caintic said his firm is bullish on the transaction passing and its impact on the company, he said Berkshire's sell-off implies Buffett thinks the upside of the deal, even if it closes, has narrowed.

Heal said Buffett isn't concerned enough to exit the industry. Berkshire maintains major positions in several financial service companies, including Ally Financial, American Express and Citigroup.