On February 28th, Caixin News Agency reported that a news about "Stock God Buffett investing in cryptocurrency" has been widely circulated in the "cryptocurrency circle": Stock God Buffett has finally recognized the value of Bitcoin and invested a total of $700 million in a bank called New Bank, whose business includes allowing customers to trade Bitcoin.
This news is very surprising at first glance, as Buffett has been opposed to investing in cryptocurrencies for many years, even stating that cryptocurrencies are rat poison. Will the changing attitude of the "stock god" add another spark to the recent rise of cryptocurrencies?
However, after careful investigation by the author, it was discovered that this news was full of errors and omissions, which can be described as an exaggeration.
Li Kui and Li Gui can't distinguish foolishly?
Firstly, it is rumored that New Bank in the screenshot has no direct relationship with cryptocurrency or Buffett.
According to the official website of New Bank, this bank is an independent community bank founded by a group of Korean Americans on September 29, 2006. It operates a total of six retail branches located in New York and New Jersey. Their main business is actually quite traditional: providing financial solutions to local community small business owners - in other words, this New Bank is actually similar to our domestic small loan company.
From the company's official website, it appears that this New Bank has not operated any cryptocurrency business and has not received any investment from Buffett.
In the author's opinion, the rumor of "Buffett investing in New Bank" may be a confusion between New Bank and Nu Bank, which seems more in line with the rumored characteristic of "Buffett investing in banks with cryptocurrency business".
Nu Bank is a large fintech company in Latin America, with its parent company being Nu Holdings (US stock code: NU). Public information shows that the company was founded in 2013 and provides services to nearly 94 million customers in Brazil, Mexico, and Colombia. In addition to traditional banking services, the bank also operates a digital finance platform called Nucrito for trading Bitcoin and Ethereum.
According to foreign media reports, in June 2021, Berkshire Hathaway invested $500 million in Nu Bank by leading the extension of Series G financing.
After Nu Holdings landed on the US stock market in December 2021, Berkshire's 13F report showed that in the fourth quarter of 2021, Berkshire Hathaway held a total of $1 billion worth of Nu Bank A-shares. After that, Buffett did not make any additional positions.
In some rumored articles, Nu Bank is introduced as the parent company of Newbank with a serious tone. However, in reality, apart from their similar names, there is no actual connection between the two: there is no official information showing any equity connection between the two, and Nu Bank's business only covers Latin America, without mentioning any business in the United States.
Old stories being turned over and told as new stories?
After Nu Bank went public on the US stock market in 2021, due to its business being tied to cryptocurrencies, its stock price also fluctuated largely with cryptocurrency prices.
In 2021 and 2022, due to weak cryptocurrency trends, the stock price of Nu Bank also fell by 16% and 56%, respectively. In 2023 and early this year, as cryptocurrency prices rebounded, the stock price of Nu Bank also rose, rising by 104% and 33% respectively.
The recent rise in the stock price of Nu Bank may also be one of the reasons why the cryptocurrency community has re focused on this stock. However, it should be noted that Buffett's investment in NuBank occurred before and after the company's IPO three years ago, which means that the rumored article about "Buffett's investment" is actually old news.
Moreover, Buffett invested in Nu Bank in 2021, while Nu Bank launched its cryptocurrency trading platform Nucrito in 2022. So Buffett's investment in the company may not necessarily mean he values its cryptocurrency trading business.
In fact, Buffett's investment in Nu Bank may reflect more of his consistent aesthetic of "value investing": Nu Bank was founded by David Velez, a former venture capitalist at Sequoia Capital. In addition to its experienced founder, Nubank's business grew rapidly. In the decade after its establishment, it utilized fintech technology to achieve a basic annual increase in user numbers in Latin America, a market lacking financial services. At present, the number of users of the bank in Brazil has reached 87.8 million, accounting for half of Brazil's adult population, making it the fourth largest bank in the country.
According to the latest financial report released by Nu Bank, the majority of the company's current revenue still comes from traditional financial products such as credit cards, insurance policies, and traditional investment accounts. Buffett's investment in it may not have much to do with cryptocurrencies.