Why did the billionaire investor dump billions of Bank of America (BofA) shares? That’s the big question floating around Wall Street. Certain implications have set off alarm bells at major US banks.
The abrupt sale of billions of dollars in Bank of America (BofA) shares by the iconic Berkshire Hathaway fund Warren Buffetthas certainly puzzled market strategists. Some associate it with the 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 that the legendary investor chose to increase the cash position, to record levels, due to the high stock prices in the face of an artificial intelligence (AI) bubble. The truth is that Buffett’s move on BofA intrigues analysts who fear it could be a turning point in the market.
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 (SEC), The fund sold 21.1 million shares of the bank in the last days of August, which earned it a total of US$848.2 million after selling the shares at an average price of US$40.24.
The sale of the bank’s shares intensified starting on July 17, and since then, Berkshire Hathaway has sold BofA shares in 21 of the last 33 sessions.
According to CNBC, the operations have resulted in a 15% reduction in the group’s position in the bank’s capital, after the sale of 150.1 million shares for US$6.2 billion, which yields an average price of US$41.33. However, the bank still remains the fund’s third largest investment, representing 11% of its portfolio. In addition, Berkshire remains BofA’s largest shareholder with an 11.4% stake, valued at $36 billionalthough the latest sales have brought Vanguard, BofA’s second-largest shareholder, closer.
BofA Stock Sale: Is There Another Motive?
Apparently There is another potential reason for Buffett’s sudden stock sell-off that could also put the rest of the major US banks in jeopardy. That reason is linked to fears that a U.S. regulatory investigation into fentanyl money laundering at Toronto-Dominion Bank (TD) could spread to major Wall Street financial institutions.
According to Sam Cooper in The Bureau, David Asher, an investigator working with the State Department, The CIA and the DEA’s Special Operations Division revealed about the US government’s investigations into billions of dollars of fentanyl-laced cash laundering through Toronto-Dominion Bank and other major US banks.that transnational mafias co-opted by the Chinese Communist Party (CCP) run North American money laundering networks through a “command and control” structure centered in Toronto and linked to the notorious Markham, Ontario-based drug lord known as Tse Chi Lop, also called “Brother Number 3.”
Asher said the U.S. government has compelling evidence that Chinese Triad leaders like Tse Chi Lop (or 14K or Sun Yee On) are working with the CCP to facilitate global money laundering and drug trafficking operations involving Mexican cartels. The investigation’s findings also show that Chinese international students are being used as mules, to deposit fentanyl cash for the Triads and Mexican cartels into U.S. banks. In the case of TD Bank, the bank’s alleged involvement in laundering fentanyl-related funds has triggered regulatory and criminal investigations that could cost TD upwards of $4 billion, but Asher suggests this is just the tip of the iceberg, setting off alarm bells on Wall Street.
It is worth remembering that Berkshire Hathaway’s operations usually have a major impact on the markets, a fact that was last confirmed on August 5, when Apple lost 4.95% on Wall Street after Buffett’s fund unexpectedly sold 49% of its stake in the technology company in the second quarter.
Source: Ambito
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