The recent trend of Berkshire Hathaway reducing its stake in Bank of America continued this week, marking the sixth consecutive trading day that Warren Buffett’s conglomerate has sold off shares in the bank.
A new regulatory filing revealed that Berkshire Hathaway sold an additional 18.9 million shares of Bank of America through transactions on Monday, Tuesday, and Wednesday at an average price of $42.46. This move generated $802.5 million in revenue for the conglomerate. Over the span of the last six trading sessions, Berkshire has sold a total of 52.8 million Bank of America shares, amounting to $2.3 billion, which has reduced its stake in the bank to 12.5%.
One plausible explanation for Warren Buffett’s decision to reduce Berkshire’s investment in Bank of America could be valuation concerns. Despite the bank outperforming the broader market by more than 25% in 2024, Berkshire seems to be trimming its bet on the financial institution. This move follows Berkshire’s pattern of exiting other financial positions in recent years, including JPMorgan, Goldman Sachs, Wells Fargo, and U.S. Bancorp.
This is not the first time that Berkshire Hathaway has adjusted its stake in Bank of America. In 2019, it was the first time in nearly a decade that Berkshire reduced its holdings in the bank. Previously, Warren Buffett had shown confidence in Bank of America by purchasing $5 billion worth of the bank’s preferred stock and warrants in 2011 during the aftermath of the financial crisis.
Despite the recent sell-off, Warren Buffett has been complimentary of Bank of America’s leadership. In 2023, he praised CEO Brian Moynihan and expressed his satisfaction with the deal Berkshire struck with the bank years ago. Buffett’s positive remarks about Bank of America’s management highlight his personal affinity for the company, even as he continues to adjust the conglomerate’s investment portfolio.
Berkshire Hathaway’s decision to sell off a significant portion of its Bank of America shares raises questions about the conglomerate’s strategy and the factors influencing its investment decisions. Warren Buffett’s continued adjustments to Berkshire’s holdings in the bank demonstrate a thoughtful and deliberate approach to managing the conglomerate’s portfolio in response to changing market conditions.