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Berkshire Reports Synchrony Stake While Exiting Former Parent GE

Warren Buffett has long preached the importance of investing in businesses that are hard for competitors to copy. That may be part of why his Berkshire Hathaway Inc. built a $520 million stake in Synchrony Financial during the second quarter.

The credit-card company, which was spun off by General Electric Co. two years ago, is a leader in issuing plastic under the brands of its retail partners. And like American Express Co., in which Berkshire is the biggest investor, Synchrony operates a payments network while also making loans.

“That’s something that’s difficult to replicate,” Arren Cyganovich, an analyst at DA Davidson & Co., said in a phone interview of the dual roles. “So if you’re thinking about the competitors in the retail and private-label card space, there aren’t too many that have the capabilities that Synchrony has.”

Another reason: A possible bargain. Synchrony slumped 18 percent this year through Monday’s close on concern about risks tied to swelling consumer debt. That could have provided Buffett’s company an opportunity to pick up the stock at attractive prices, said Cyganovich. Berkshire had 17.5...


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