Warren Buffett’s investment company, Berkshire Hathaway, has been consistently reducing its stake in Bank of America since mid-July. The conglomerate recently sold 5.8 million shares of BofA in separate sales, totaling over $7 billion. This selling streak has now extended to 12 consecutive sessions, with Berkshire’s stake in the bank decreasing to 11%.
As a result of the recent sales, Bank of America has fallen to the No.3 spot on Berkshire’s list of top holdings, trailing behind Apple and American Express. Before the selling spree, BofA was Berkshire’s second biggest holding. Buffett initially invested $5 billion in BofA’s preferred stock and warrants in 2011, converting them into shares in 2017. He further added 300 million shares to his bet in 2018 and 2019.
Bank of America CEO Brian Moynihan commented on Berkshire’s recent sales, stating that he has no knowledge of Buffett’s motivations for selling. He highlighted Buffett’s shrewd investment in the bank back in 2011, which helped bolster confidence during a challenging period for the lender. Moynihan acknowledged Buffett’s successful investment, noting that investors who followed Buffett’s lead in 2011 would have made a significant return on their investment.
Shares of Bank of America have experienced a slight dip of about 1% since the beginning of July, but overall, the stock has seen a 16.7% increase this year, outperforming the S&P 500. Moynihan expressed confidence in the market’s ability to absorb the stock, even as Berkshire continues to sell off its shares. He emphasized that the bank continues to buy back its own shares, indicating a positive outlook for the future.
Warren Buffett’s Berkshire Hathaway’s decision to offload a significant portion of its Bank of America shares has raised questions about Buffett’s investment strategy and future plans. The selling spree has reshuffled Berkshire’s top holdings, with Bank of America now taking a back seat to other investments. Despite the uncertainty surrounding Buffett’s motivations, Bank of America CEO Brian Moynihan remains optimistic about the bank’s performance and the market’s response to the ongoing sales. Buffett’s initial investment in BofA back in 2011 continues to be a key point of reference for investors, showcasing the potential for significant returns in the long run.