In a surprising move, Berkshire Hathaway decided to trim its substantial holding in Bank of America for the first time in 4½ years. The conglomerate, led by Warren Buffett, sold 33.9 million shares of Bank of America over the course of three days for almost $1.5 billion, marking a significant reduction in its stake.
It seems that Berkshire Hathaway may be taking some profits with this decision, especially considering Bank of America’s impressive 2024 run. The bank’s shares have rallied 27.4% so far this year, reaching their highest levels since March 2022. This move comes after Buffett trimmed Berkshire’s Apple holding by 13% in the first quarter for tax reasons.
Buffett’s purchase of Bank of America shares has become a legendary Wall Street tale. In 2011, he bought $5 billion worth of the bank’s preferred stock and warrants to support the institution during the aftermath of the financial crisis. The idea came to him while he was in the bathtub. Despite initial difficulties reaching CEO Brian Moynihan, the deal eventually came together within hours.
Even with the recent sell-off, Bank of America remains Berkshire’s second-largest equity position, behind only Apple. Berkshire still holds 999 million shares of Bank of America, with a market value of almost $43 billion. Additionally, Berkshire remains Bank of America’s largest shareholder, with a 10.8% stake in the bank.
Market Reaction
Following the news of Berkshire’s sale of Bank of America shares, the bank’s stock dipped slightly on Monday. This move by one of the most renowned investors in the world is sure to draw attention from market analysts and investors alike. The dynamics of this transaction, along with Buffett’s historical fascination with Bank of America, make this a significant event in the financial world.
Berkshire Hathaway’s decision to sell some Bank of America shares after holding them for over 4½ years is a noteworthy development. The reasons behind this move, coupled with the historical context of Buffett’s involvement with the bank, make this a story worth following for those interested in the intersection of investing and business.