Since mid-July, Berkshire Hathaway, led by Warren Buffett (Trades, Portfolio), has been consistently selling shares of Bank of America, the second-largest bank in the U.S. After recent transactions, Berkshire's stake in the bank has dropped below 10%.
Recent filings with the U.S. Securities and Exchange Commission (SEC) reveal that Berkshire sold over 9.5 million Bank of America shares, worth $382.4 million, over a three-day period. This sale reduced Berkshire's holdings to 775 million shares, or about 9.987%. Falling below the 10% threshold means Berkshire is no longer required to report its transactions in a timely manner, according to SEC rules.
Investors will now have to wait for Berkshire's quarterly financial report or 13F filing, due in mid-November, to see if more Bank of America shares have been sold. Traditionally, when Buffett begins selling a stock, he often continues until he has divested completely.
Despite the reduction, Berkshire remains Bank of America's largest institutional investor. On the day of the latest filing, Bank of America's shares dipped slightly by 0.52% to $39.97. Since the selling began in July, the bank's shares have declined by approximately 10% but have gained 1% over the past month. The bank's CEO, Brian Moynihan, has indicated that their stock buyback program is helping stabilize the market.
Buffett's initial investment in Bank of America came in 2011 with a $5 billion purchase of preferred shares and warrants to boost confidence amid the financial crisis. In 2017, these warrants were converted into common stock, making Berkshire the bank's largest shareholder. Additional shares were acquired in 2018 and 2019.
Historically cautious about bank stocks, Buffett has been offloading shares of major banks like JPMorgan Chase, Goldman Sachs, Wells Fargo, and U.S. Bancorp in recent years. He has expressed skepticism about the banking sector, citing changing deposit dynamics since the 2008 financial crisis and banking failures in 2023. Buffett suggests that poor communication from regulators and politicians, along with advances in digital banking, have made bank runs easier during crises.
