Warren Buffett’s Berkshire Hathaway, which has avoided major acquisitions in the financial sector in recent months, may have had a $3.5 billion two-day paper profit on six major banking and financial services investments.

The two-day rally in financial shares, which drove the broad S&P Financials Index 24 per cent, came as the government announced sweeping measures to rescue the financial system and restore confidence in shaky markets.

Shares of Wells Fargo & Company, the fifth-largest US bank and Berkshire’s second-largest investment as of June 30, rose 19pc over the last two days and touched a record high. That would have given Berkshire a $1.85bn paper profit on its reported 290.7 million share stake.

Berkshire would also have had a $1.12bn profit on its reported 151.6m share stake in American Express Company, the credit card and travel services company. Stakes in Bank of America, M&T Bank, SunTrust Banks and US Bancorp also gained value.

Buffett has long favoured investments in undervalued businesses with strong earnings and management. That has helped him transform Berkshire since 1965 from a failing textile maker into a conglomerate with at least 76 companies.

“He’s always felt Wells was very well-managed,” said Frank Betz, who oversees more than $800m at Carret/Zane Capital Management in Warren, New Jersey. “Why does he like banks? Like Willie Sutton said, it’s where the money is.”

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