Is Buffett Being 'Greedy When Others Are Fearful' By Seeking To Buy More Wells Fargo?

Warren Buffett has many investment philosophies, but there is one particular saying that should stand out in the current market environment: "Be fearful when others are greedy and greedy when others are fearful."

Banking stocks have been hard hit as of late, especially following the Brexit vote, which paints an uncertain future for the global economy and financial institutions. So why is Buffett looking to boost his stake in Wells Fargo & Co (NYSE: WFC) — a banking stock that is lower by nearly 9 percent over the past month and down more than 18 percent over the past year?

Following His Own Advice?

Is Buffett being greedy while the rest of the market is being fearful?

First, it is important to note that Buffett and his Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) fund hasn't officially said he plans to increase in stake in the bank. Nevertheless, the billionaire did seek permission from the U.S. government to expand his stake in the bank beyond 10 percent.

Investors need to seek permission from the Federal Reserve to hold more than 10 percent of any financial institution as part of the Change in Bank Control Act.

"Berkshire is seeking permission to retain its current ownership position in Wells Fargo and to acquire additional shares of common stock of Wells Fargo," The Street quoted Berkshire as saying in its recently filed application. "Berkshire does not have any specific transaction or dollar value in mind."

Buffett May Not Be Greedy After All

As noted by The Street, Wells Fargo's ongoing share buyback program by default could boost Buffett's holding of Wells Fargo above the 10 percent threshold.

The Street quoted Jim Shanahan, a banking analyst at Edward Jones, who suggested that Buffett's application is not due to "anything strategic."

In other words, Buffett may not be acting greedy, he may just be taking the necessary legal steps to continue holding his position and not adding to it.