Warren Buffett’s Berkshire Hathaway has been on a selling streak when it comes to its stake in Bank of America. This streak has now extended to nine consecutive days, indicating that this move is more than just a simple trimming of their long-term holding. Over the course of these nine trading sessions, Berkshire has sold a total of 71.2 million shares of the bank, amounting to over $3 billion in sales.

Implications of the Selling Spree

The recent regulatory filing has revealed that Berkshire sold 18.4 million shares of Bank of America from Thursday to Monday for a total of $767 million at an average price of $41.65 per share. Despite this selling spree, Berkshire still retains ownership of 961.6 million shares of BofA, with a market value of $39.5 billion. However, if the conglomerate continues to offload these shares, Bank of America could potentially fall below American Express to become Berkshire’s third-largest equity holding.

Warren Buffett famously bought $5 billion worth of Bank of America’s preferred stock and warrants back in 2011, following the financial crisis. This move helped boost confidence in the struggling lender, which was facing losses linked to subprime mortgages. In 2017, Buffett converted these warrants, making Berkshire the largest shareholder in BofA. The conglomerate’s cost basis on the Bank of America position was around $14.15 per share or $14.6 billion by the end of 2021.

Bank of America’s stock closed at $41.09 on Monday. Berkshire’s decision to sell shares may be driven by the bank’s strong performance, with a 22% rally in 2024, outpacing the S&P 500’s 14.5% return. This move could indicate that Berkshire is taking profits after Bank of America’s robust run, with the bank having a successful year so far. The upcoming release of Berkshire’s second-quarter earnings is expected to provide more insight into the conglomerate’s largest holdings and any further changes to its investment portfolio.

Warren Buffett’s Berkshire Hathaway’s decision to sell off Bank of America shares raises questions about the conglomerate’s long-term strategy and its continued confidence in the banking sector. As one of BofA’s largest shareholders, Berkshire’s actions in the coming days will be closely watched by investors and analysts alike to gauge the future direction of its investment decisions.

Finance

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