Warren Buffett’s Berkshire Hathaway has been steadily offloading Bank of America shares over the past 12 consecutive days. This recent selling spree culminated in the shedding of 19.2 million BofA shares, totaling nearly $779 million at an average selling price of $40.52 per share, according to a new regulatory filing. The conglomerate’s total sales of BofA stock now exceed $3.8 billion. Despite this, Berkshire still remains the largest shareholder of the bank, holding a 12.1% stake.
With the recent sell-off of Bank of America shares, the stock has dropped to the No.3 spot on Berkshire’s list of top holdings. Bank of America now trails behind Apple and American Express, with a market value of $37.2 billion at Thursday’s close of $39.50. Prior to this selling streak, BofA had long been Berkshire’s second biggest holding. The decision to part ways with such a significant portion of Bank of America stock signals a shift in Berkshire’s investment strategy.
Buffett’s investment in Bank of America dates back to 2011 when he famously bought $5 billion worth of BofA’s preferred stock and warrants in the aftermath of the financial crisis. This move helped shore up confidence in the embattled lender, which was struggling with losses tied to subprime mortgages. In 2017, Buffett converted those warrants, making Berkshire the largest shareholder in BofA. At the time, Buffett expressed his confidence in the business, valuation, and management of the bank, stating that he liked them “very much.” However, it seems his sentiment towards the bank has shifted over time, leading to the recent sell-off.
BofA’s Recent Performance
Under the leadership of Brian Moynihan since 2010, Bank of America has shown promising results in the second quarter. The bank reported blowout results, indicating rising investment banking and asset management fees, as well as a positive outlook on net interest income. Despite this positive performance, concerns about a looming recession have plagued the financial sector, leading to a 5.2% drop in BofA stock this week, with prices going as low as $38.98 in Thursday’s trading. Year to date, however, BofA is still up more than 17%, outperforming the S&P 500 index.
Warren Buffett’s decision to sell a significant portion of Bank of America shares reflects a strategic shift in Berkshire Hathaway’s investment portfolio. While Buffett has long been a supporter of the bank, recent market conditions and changing sentiments have led to this divestment. Only time will tell how this move will impact Berkshire’s overall investment strategy and the future performance of Bank of America.
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