Warren Buffett’s Berkshire Hathaway has been steadily reducing its stake in Bank of America over the past six straight trading days. The conglomerate sold an additional 18.9 million shares over a period of Monday, Tuesday, and Wednesday, at an average price of $42.46, generating $802.5 million in proceeds. This recent sell-off follows the sale of 52.8 million Bank of America shares in total, amounting to $2.3 billion, resulting in a decrease of the stake to 12.5%.
One possible reason for Buffett’s decision to trim the Bank of America stake could be valuation concerns. Bank of America has been outperforming the broader market this year, with its stock price increasing by more than 25% compared to almost 14% for the S&P 500. This move marks the first time since the fourth quarter of 2019 that Berkshire has reduced its Bank of America holding.
Buffett’s history with Bank of America dates back to 2011 when he purchased $5 billion worth of the bank’s preferred stock and warrants during the aftermath of the financial crisis. The Oracle of Omaha expressed admiration for the leadership at Bank of America, particularly CEO Brian Moynihan. Despite offloading positions in other financial institutions last year, Buffett maintained his confidence in Bank of America, citing a “very decent deal” and his personal fondness for Moynihan.
In previous years, Berkshire Hathaway exited several longtime bank positions, including JPMorgan, Goldman Sachs, Wells Fargo, and U.S. Bancorp. However, Buffett’s sentiment towards Bank of America remained positive, reflecting his belief in the bank’s leadership and the initial investment he made in 2011.
Warren Buffett’s Berkshire Hathaway’s ongoing reduction in its Bank of America stake reflects a strategic decision based on valuation concerns and the company’s performance in the market. Despite trimming down its position, Berkshire still holds a substantial number of Bank of America shares, indicating a continued interest in the bank’s future prospects.
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