Berkshire Hathaway’s recent sale of Bank of America shares indicates a strategy to reduce its stake without losing its position as the largest shareholder. Despite these sales, the bank continues to show solid performance in the market.
Since mid-July, the billionaire investor has reduced his stake in BofA by about 15%.
Berkshire Hathaway of Warren Buffett (BRK-B) reduced its stake in Bank of America (BAC) again, adding total sales of almost $7 billion since mid-July.
The conglomerate, led by one of the world’s most respected investors, disclosed late Thursday that it sold $18.7 million worth of shares in the second-largest U.S. bank between Sept. 3 and Sept. 5, raising about $760 million.
Berkshire remains BofA’s largest shareholder, with an 11.1% stake, according to LSEG data. Under regulatory requirements, Berkshire Hathaway must continue to report stock sales until its stake falls below 10%.
Buffett began investing in the bank in 2011, when Berkshire bought $5 billion in preferred stock. That purchase signaled his confidence in CEO Brian Moynihan’s ability to restore the bank to health after the 2008 financial crisis.
Unrest in the market
The abrupt sale of billions of dollars in Bank of America (BofA) shares by Warren Buffett’s flagship Berkshire Hathaway fund has undoubtedly puzzled market strategists. Some associate it with fears of an impending recession and the Federal Reserve’s (Fed) interest rate cut cycle, which is expected to begin in the middle of this month and affect the bank’s interest income.
Others believe the legendary investor opted to increase the cash position to record levels because of soaring stock prices amid an artificial intelligence (AI) bubble. Buffett’s move on BofA intrigues analysts who fear it could be a turning point in the market.
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Since mid-July, the billionaire investor has reduced his stake in BofA by about 15%, generating $5.4 billion in gains and increasing the fund’s record cash holdings. But according to a filing with the Securities and Exchange Commission, the fund sold 21.1 million shares of the bank in the last few days of August, netting a total of $848.2 million after selling the shares at an average price of $40.24.
Source: Ambito
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