Warren Buffett’s Berkshire Hathaway has been on a selling streak, particularly with its Bank of America stake. This streak has now extended to nine straight days, raising questions about Buffett’s motives in trimming this long-time 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. This follows a trend of consecutive sales that has seen Berkshire reduce its stake by 71.2 million shares, totaling over $3 billion in sales.
Despite the selling spree, Berkshire still holds a significant stake in Bank of America, with 961.6 million shares valued at $39.5 billion. This makes BofA Berkshire’s second-largest equity holding after Apple. However, if the conglomerate continues to sell off its shares, Bank of America may fall below its third-place holding in American Express, currently valued at $37.6 billion.
Warren Buffett’s relationship with Bank of America dates back to 2011 when he bought $5 billion worth of BofA’s preferred stock and warrants after the financial crisis. This move helped restore confidence in the struggling lender dealing with losses from subprime mortgages. By 2017, Buffett had converted those warrants, making Berkshire the largest shareholder in BofA. Buffett had previously stated that it would be a “long, long time” before he would consider selling any shares. Berkshire’s cost basis on the BofA position was disclosed to be about $14.15 per share or $14.6 billion at the end of 2021. However, the holding was valued at $39.2 billion by the end of March, indicating significant profit potential.
The recent selling activity by Berkshire could be interpreted as a profit-taking strategy following Bank of America’s strong performance in the market. In 2024 alone, the bank stock has rallied 22%, outperforming the S&P 500’s return of 14.5%. With Berkshire set to release second-quarter earnings soon, more information on the conglomerate’s big holdings, including its stake in BofA, will be revealed.
Warren Buffett’s decision to trim Berkshire Hathaway’s Bank of America stake is a strategic move that reflects the conglomerate’s evolving investment strategy and profit-taking opportunities. By analyzing the selling streak, share ownership, history of investment, and profit-taking strategy, investors can gain insights into Buffett’s approach to managing Berkshire’s portfolio.
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