Warren Buffett’s investment conglomerate, Berkshire Hathaway, has been steadily reducing its stake in Bank of America (BofA) over the past few months.
Since mid-July, Berkshire has sold more than $7 billion worth of BofA shares, cutting its stake from over 13% to 11.1%. The latest sales, disclosed in a regulatory filing, involved the offloading of 5.8 million shares between September 6 and 10, totaling nearly $229 million.
This marks a continuation of Berkshire’s selling spree, which began in mid-July and has now extended for 12 consecutive sessions. In total, the company has sold approximately 174.7 million BofA shares, with 858.2 million shares remaining. Bank of America, once Berkshire’s second-largest holding, now ranks behind Apple and American Express in the conglomerate’s portfolio.
Brian Moynihan, CEO of Bank of America, addressed Buffett’s recent stock sales during the Barclays Global Financial Services Conference, stating that he had no direct knowledge of Buffett’s reasons for selling. Moynihan emphasized the value of Buffett’s long-standing investment in BofA, particularly during the financial crisis of 2011 when Berkshire’s $5 billion investment in preferred stock helped stabilize the bank.
“He’s been a great investor for our company,” Moynihan said.
Thus he acknowledged the pivotal role Buffett played in restoring confidence in BofA during a challenging period. Buffett’s investment strategy has proven highly profitable, with shares of BofA trading at nearly $40 today, significantly higher than the $5.50 price during his initial investment.
Despite Berkshire’s significant share sales, Bank of America’s stock has remained relatively stable, dipping just 1% since July. Overall, BofA shares are up 16.7% this year, slightly outperforming the broader S&P 500 index.
While some analysts speculate that Berkshire might be trimming its holdings to reduce its stake below the 10% threshold and avoid regulatory scrutiny, the precise reasoning behind the sales remains unclear. Regardless, Moynihan expressed optimism, noting that the market has been able to absorb the stock, and the bank itself is buying back shares.
In the broader context, Berkshire Hathaway continues to thrive. The Omaha-based conglomerate recently hit a milestone as the first non-tech US company to reach a $1 trillion market capitalization. As of Tuesday, the company’s market value stands at $988.83 billion, reflecting strong returns of nearly 27% this year compared to the S&P 500’s 16%.
CNBC, Yahoo Finance, and Quartz contributed to this report.
