Over the course of 12 consecutive days, Berkshire Hathaway, the conglomerate chaired by Warren Buffett, has been steadily selling off Bank of America shares. The company shed a total of 19.2 million BofA shares for almost $779 million, with an average selling price of $40.52 per share. This sustained sell-off has now amassed total sales exceeding $3.8 billion. Despite holding on to 942.4 million shares of BofA, valued at $37.2 billion as of Thursday, the conglomerate seems determined to reduce its stake in the bank. Bank of America has slipped to the No.3 spot on Berkshire’s list of top holdings, behind Apple and American Express.
Warren Buffett’s relationship with Bank of America dates back to 2011 when he famously bought $5 billion worth of the bank’s preferred stock and warrants in the aftermath of the financial crisis. This move helped boost confidence in the struggling lender, which was facing losses from subprime mortgages. In 2017, Buffett converted those warrants, solidifying Berkshire’s position as the largest shareholder in BofA. At the time, Buffett expressed his admiration for the bank’s business, valuation, and management, stating that he liked them “very much” and that it would be a “long, long time” before he would consider selling.
Bank of America, led by Brian Moynihan since 2010, recently reported strong results for the second quarter. The bank showcased rising investment banking and asset management fees, as well as a positive outlook on net interest income. Despite these positive developments, BofA’s stock has declined by 5.2% this week alone, reaching as low as $38.98 in Thursday’s trading session. This downward trend is reflective of broader concerns within the financial sector, as fears of a looming recession continue to linger.
Implications for Investors
For investors closely watching Berkshire Hathaway’s actions, the ongoing sell-off of Bank of America shares raises questions about the conglomerate’s long-term outlook on the bank. With Buffett’s history of strategic investments and prudent decision-making, his recent sell-off may indicate a shift in his sentiment towards BofA. It remains to be seen how this move will impact the broader financial markets and whether other institutional investors will follow suit in adjusting their holdings in Bank of America. As Berkshire Hathaway continues to reshape its portfolio, investors will be keenly observing the conglomerate’s next moves in the ever-evolving landscape of the financial sector.