Warren Buffett addresses attendees at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, on May 4, 2024. CNBC
In a significant move, Berkshire Hathaway, led by Warren Buffett, has been steadily reducing its stake in Bank of America over the past week. The holding company, based in Omaha, Nebraska, has sold off shares of the bank for six consecutive trading days. The recent transactions involved the sale of nearly 19 million Bank of America shares on Monday, Tuesday, and Wednesday, generating approximately $802.5 million. These shares were sold at an average price of $42.46 each.
In total, Berkshire Hathaway has sold 52.8 million Bank of America shares during this period, amounting to $2.3 billion. This sale has reduced its stake in the bank to 12.5%. Despite the reduction, Berkshire still holds 980.1 million shares of Bank of America, which are valued at around $41.3 billion. This is a substantial holding, but it is still far smaller compared to Berkshire's massive $172.5 billion investment in Apple.
According to regulatory requirements, Berkshire Hathaway must disclose any significant changes in its stock holdings within two business days. This rule is in place when a company’s stake in another entity exceeds 10%, which is the case here.
Buffett's decision to trim Berkshire's holdings in Bank of America could be driven by valuation concerns, even though the bank has performed well this year. Bank of America’s stock has risen by over 25% in 2024, outpacing the S&P 500’s gain of nearly 14%. This marks the first reduction in Berkshire's Bank of America stake since the last quarter of 2019.
Back in 2011, Buffett made a notable investment in Bank of America, buying $5 billion worth of the bank’s preferred stock and warrants. This investment was crucial in boosting confidence in the bank, which was struggling with losses from subprime mortgages after the financial crisis.
Despite this recent move, Buffett has previously spoken highly of Bank of America and its leadership. In 2022, even as Berkshire Hathaway exited several other financial positions, including those in JPMorgan, Goldman Sachs, Wells Fargo, and U.S. Bancorp, Buffett praised Bank of America’s CEO, Brian Moynihan. Buffett had expressed a strong affection for the bank, stating, “I invited myself in, many years earlier, and they made a very decent deal for us. And I like Brian Moynihan enormously, and I just don’t want to, I don’t want to sell it.”
