Warren Buffett’s Berkshire Hathaway has been on a selling streak, shedding a significant portion of its stake in Bank of America for nine consecutive days. This suggests that the investment conglomerate is not just making minor adjustments to its longtime holding. The recent regulatory filing revealed that Berkshire sold a total of 18.4 million shares of the bank over the past few days, amounting to $767 million at an average price of $41.65 per share.
During the nine trading sessions, Berkshire has reduced its stake in Bank of America by 71.2 million shares through sales totaling over $3 billion. Despite the significant divestment, Berkshire still holds 961.6 million shares of BofA, with a market value of $39.5 billion. This makes Bank of America Berkshire’s second-largest equity holding, trailing behind only Apple. However, if the selling trend continues, the bank could potentially slip to third place, falling behind American Express.
In 2011, Warren Buffett made a bold move by investing $5 billion in Bank of America’s preferred stock and warrants, following the aftermath of the financial crisis. This investment helped bolster confidence in the struggling lender, which was grappling with losses from subprime mortgages. By 2017, Buffett converted those warrants, positioning Berkshire as the largest shareholder in Bank of America. At the end of 2021, Berkshire’s cost basis on the BofA shares was approximately $14.15 per share, amounting to $14.6 billion. However, as of March, the holding had surged in value to $39.2 billion, with BofA closing at $41.09 on Monday.
It is speculated that Berkshire Hathaway might be capitalizing on Bank of America’s strong performance, particularly this year. The bank stock has surged by 22% in 2024, outperforming the S&P 500’s return of 14.5%. With Berkshire Hathaway scheduled to release its second-quarter earnings soon, more details regarding the conglomerate’s major holdings, including its BofA stake, might come to light. Buffett’s move to gradually offload Bank of America shares underscores the ever-evolving nature of investment decisions within Berkshire’s portfolio.