Warren Buffett’s Berkshire Hathaway has been on a selling spree, reducing its stake in Bank of America for six consecutive trading days. The conglomerate sold 18.9 million shares of the bank at an average price of $42.46, raising $802.5 million.
In total, Berkshire has unloaded 52.8 million Bank of America shares worth $2.3 billion, bringing its stake down to 12.5%. Despite the sell-off, Berkshire still holds 980.1 million shares of Bank of America, valued at $41.3 billion.
Speculation suggests that Buffett may be trimming the stake due to valuation concerns. Bank of America has outperformed the broader market, with the stock rising over 25% in 2024 compared to the S&P 500’s 14%. This marks the first time since 2019 that Berkshire has cut its Bank of America stake.
In 2011, Warren Buffett invested $5 billion in Bank of America’s preferred stock and warrants to support the bank during the aftermath of the financial crisis. Last year, Buffett praised the leadership at Bank of America, particularly CEO Brian Moynihan, while divesting from other financial institutions like JPMorgan, Goldman Sachs, Wells Fargo, and U.S. Bancorp.
Despite the recent sell-off, Buffett has expressed his admiration for Bank of America and its management. In 2023, Buffett stated, “I invited myself in, many years earlier, and they made a very decent deal for us. And I like Brian Moynihan enormously, and I just don’t want to, I don’t want to sell it.” This sentiment indicates that Buffett’s decision to reduce the stake may be purely a financial move rather than a reflection of his confidence in the bank.
Overall, Berkshire Hathaway’s continued reduction of its Bank of America stake reflects Buffett’s strategic investment philosophy and his focus on maximizing returns for his conglomerate.
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