While Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) CEO Warren Buffett has shed some bank stocks in the past year -- most notably JPMorgan Chase (NYSE: JPM) , Goldman Sachs (NYSE: GS) , and most of Wells Fargo (NYSE: WFC) -- his portfolio remains firmly rooted in the sector. In fact, three of his largest holdings are Bank of America (NYSE: BAC) , American Express (NYSE: AXP) , and Moody's (NYSE: MCO) .
Given Buffett?s focus on value stocks, the financial sector, coming out of the recession, is a particularly good place to mine for deals right now. But beyond value, the Oracle of Omaha also looks for stocks with consistently strong return on equity, healthy margins, and a competitive edge in their industry -- to name some of his criteria. While Buffett has been mostly paring down his portfolio and building up his cash, don't be surprised if he and his investment team start putting that money to work soon. One option that fits the bill is Discover Financial (NYSE: DFS) .
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Don't Be Surprised if Warren Buffett Has Bought This Stock