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Berkshire Hathaway, the investment giant led by Warren Buffett, has been reducing its holdings in Bank of America, selling over $3.8 billion worth of shares since mid-July. This latest move reflects Berkshire's ongoing adjustments in its investment portfolio.
According to a recent filing, Berkshire Hathaway sold around 19.2 million shares of Bank of America, totalling approximately $779 million, between July 30 and August 1. This sale is part of a larger trend, with the conglomerate having offloaded 90.4 million shares of the bank since July 17. Despite these reductions, Berkshire Hathaway remains Bank of America's largest shareholder, owning about 942.4 million shares. This stake represents roughly 12.1% of the bank’s outstanding shares, valued at about $37.2 billion.
The decision to sell shares follows a significant rise in Bank of America's stock price, which has increased by nearly two-thirds since late October. The stock’s price exceeded 1.2 times its book value, which boosted the value of Berkshire’s investment to over $45 billion, significantly higher than the $14.6 billion Berkshire initially invested.
Berkshire Hathaway's investment in Bank of America began in 2011 when it purchased $5 billion in preferred stock. This early investment was a strong vote of confidence in Bank of America's ability to recover from the 2008 financial crisis. At that time, Buffett expressed his trust in the bank's leadership under CEO Brian Moynihan, praising Moynihan’s efforts to stabilize and rejuvenate the bank.
Warren Buffett, at 93, is one of the most respected figures in the investment world. His opinion and actions are closely watched by investors globally. Despite the recent sales, Buffett had expressed his high regard for Moynihan and his leadership earlier in the year. In April 2023, Buffett stated he was very pleased with Moynihan’s performance and had no intention of selling the bank’s stock at that time.
Berkshire Hathaway, based in Omaha, Nebraska, is a diversified conglomerate with interests in various sectors, including insurance, energy, transportation, and retail. Its notable holdings include Geico car insurance and the BNSF railroad, among many other businesses.
The ongoing sales of Bank of America shares are part of Berkshire Hathaway's strategy to manage its investment portfolio. While the company is required to disclose its sales until its stake drops below 10%, the decision to offload a substantial portion of its shares underscores the dynamic nature of investment strategies in response to market conditions.
