Warren Buffett’s Berkshire Hathaway Reduces Bank of America Stake Below 10%: $10.5 Billion in Stock Sales Since July

Warren Buffett’s investment firm, Berkshire Hathaway, has reduced its long-held stake in Bank of America (BoA) to just under 10% throughout 2024, according to a report from Bloomberg. The firm has gradually sold its shares in 15 separate rounds since mid-July, leading to concerns among other shareholders. The most recent sale, totaling $382.4 million, brings Berkshire’s total gains from these transactions to $10.5 billion. This move brings Berkshire’s stake to exactly 9.99%, a deliberate choice related to US regulatory rules, which require more frequent disclosures from investors holding over 10% in a company. Now, Berkshire will only need to update its BoA holdings quarterly, rather than immediately after each trade, leaving shareholders with less timely information.

Buffett has been a longstanding supporter of BoA and its CEO, Brian Moynihan. Berkshire first invested in the bank in 2011, providing a crucial $5 billion during a difficult period, and in 2019, the firm sought permission from the Federal Reserve to increase its stake beyond 10%. However, this recent reduction has raised questions about Buffett’s current outlook on BoA’s future.

Though Berkshire remains the largest shareholder, with a 9.99% stake valued at $31 billion, analysts have pointed out that this move could signal the removal of a psychological barrier, potentially allowing BoA’s stock to regain some momentum. However, the stock has underperformed during the period of Berkshire’s liquidation. Before the sales began in July, BoA was the top performer in the 24-company KBW Bank Index, but it has since become the second-worst performer in the index.

Some market analysts believe the decision to reduce the stake may be influenced by concerns about the broader economic climate, rising interest rates, or regulatory pressures. While Buffett has not publicly explained the reason for the reduction, this shift in Berkshire’s holdings has left investors speculating about the future of the investment.

Despite the sales, Berkshire still holds a significant portion of BoA stock, and its future performance will determine if more reductions will follow. Investors are closely watching the bank’s trajectory and whether Berkshire will make further moves in the months ahead.