It seems that Warren Buffett’s Berkshire Hathaway is on a selling streak when it comes to its big Bank of America stake. Over the past nine trading sessions, Berkshire has sold a total of 71.2 million shares of the bank, amounting to over $3 billion in sales. This indicates that the conglomerate is not just trimming its longtime holding in BofA, but potentially shifting its investment strategy.
Warren Buffett’s relationship with Bank of America goes back to 2011 when he bought $5 billion worth of the bank’s preferred stock and warrants during the aftermath of the financial crisis. This move helped boost confidence in the struggling lender, which was facing losses from subprime mortgages. In 2017, Buffett converted those warrants, making Berkshire the largest shareholder in BofA. At the end of 2021, Berkshire’s cost basis on the BofA position was $14.15 per share, amounting to $14.6 billion.
Despite Buffett’s initial pledge to hold onto the Bank of America shares for a “long, long time,” recent selling activity suggests a change in strategy. The conglomerate sold 18.4 million shares of the bank from Thursday to Monday for $767 million. This has raised concerns among investors about Berkshire’s commitment to its BofA investment. After the selling spree, Berkshire still owns 961.6 million shares of BofA, with a market value of $39.5 billion.
The impact of Berkshire’s selling streak on Bank of America’s stock price and market value remains to be seen. BofA is currently Berkshire’s second largest equity holding after Apple, but continued selling could push the bank below third-place American Express in Berkshire’s portfolio. With Berkshire set to release second-quarter earnings soon, more insight into the conglomerate’s investment decisions and future plans will be revealed.
Berkshire Hathaway’s changing stance on its Bank of America stake reflects a dynamic investment landscape where even longstanding holdings are subject to reevaluation. Warren Buffett’s strategic moves have historically been closely watched by investors, and the recent selling activity in BofA shares is no exception. As Berkshire continues to adjust its portfolio, the market will be watching closely to see how these decisions impact both Berkshire Hathaway and Bank of America moving forward.