Berkshire Hathaway’s recent streak of selling its Bank of America stake over the course of nine consecutive days has raised eyebrows in the financial world. The conglomerate sold a substantial 18.4 million shares of the bank, amounting to $767 million at an average price of $41.65. This trend has continued over the past nine trading sessions, resulting in a total stake reduction of 71.2 million shares, totaling over $3 billion in sales. Despite these significant divestments, Berkshire still holds a substantial 961.6 million shares of BofA, with a current market value of $39.5 billion.
The persistent selling spree by Berkshire Hathaway has sparked speculation about Warren Buffett’s intentions regarding the longtime holding. While BofA remains Berkshire’s second-largest equity holding after Apple, the continuous offloading of shares could potentially cause the bank to slip below third-place American Express in terms of value. As Berkshire is still BofA’s largest shareholder with a 12.3% stake, the market will be closely monitoring any further developments in this matter.
Warren Buffett’s relationship with Bank of America dates back to 2011 when he purchased $5 billion worth of the bank’s preferred stock and warrants in the aftermath of the financial crisis. This move helped restore confidence in the struggling lender, which was grappling with losses from subprime mortgages. In 2017, Berkshire converted these warrants, solidifying its position as the largest shareholder in BofA. Buffett had previously stated that it would be a “long, long time” before he considered selling any of the bank’s shares.
Berkshire Hathaway’s cost basis on the Bank of America position was approximately $14.15 per share, totaling $14.6 billion as of the end of 2021. However, by the end of March, the value of this holding had surged to $39.2 billion. With BofA closing at $41.09 on Monday, it is speculated that Berkshire may be looking to capitalize on some profits following the bank’s impressive performance this year. Bank of America’s stock has outperformed the S&P 500 with a 22% rally in 2024, compared to the index’s 14.5% return.
Berkshire Hathaway is scheduled to release its second-quarter earnings this Saturday, which will provide further insights into the conglomerate’s significant holdings. The market eagerly awaits any announcements or disclosures that may shed light on Berkshire’s future strategies regarding its Bank of America stake. The decision to sell off shares in one of its largest holdings has prompted speculation and analysis within the financial community.