US Markets
Wednesday, September 11th, 2024 4:05 pm EDT
Key Points
- Warren Buffett’s Berkshire Hathaway has sold over $7 billion worth of Bank of America shares since mid-July, reducing its stake to 11%, with 5.8 million shares sold in the latest transactions.
- Berkshire’s stake in Bank of America has dropped from second to third among its top holdings, now trailing behind Apple and American Express.
- Bank of America CEO Brian Moynihan praised Buffett’s 2011 investment that stabilized the bank during the financial crisis, highlighting its long-term success despite being uncertain about Buffett’s recent decision to sell.
Warren Buffett’s Berkshire Hathaway has continued to reduce its stake in Bank of America (BofA), selling more than $7 billion worth of shares since mid-July. The latest sale, spanning three days and totaling 5.8 million shares, brought in nearly $229 million, with an average selling price of $39.45 per share. In total, Berkshire has sold over 174.7 million shares, leaving it with an 11.1% stake in the bank, down from a much larger holding before this recent selling spree. Previously, Bank of America was Berkshire’s second-largest holding, but it has now dropped to third place behind Apple and American Express.
Buffett’s relationship with BofA dates back to 2011 when he made a $5 billion investment in the bank during the aftermath of the financial crisis. This move, which involved purchasing preferred stock and warrants, ultimately made Berkshire the largest shareholder in BofA when those warrants were converted in 2017. Buffett’s bold investment at a time when the bank was struggling with losses tied to subprime mortgages not only stabilized BofA but also proved to be a lucrative long-term bet. In 2018 and 2019, Berkshire added another 300 million shares to its position, solidifying its commitment to the bank.
Despite the recent sell-off, BofA CEO Brian Moynihan has expressed appreciation for Buffett’s role in supporting the bank during tough times. While he does not know Buffett’s motivations for selling, Moynihan noted that the market is absorbing the stock, with the bank even buying back some of its shares. Moynihan highlighted the success of Buffett’s investment, pointing out that shares of BofA, which were trading at around $5.50 when Buffett initially invested, have since risen to nearly $40.
Bank of America’s stock performance this year has been positive, with a 16.7% gain, slightly outperforming the S&P 500. Moynihan credits Buffett’s strategic investment for not only stabilizing the bank but also for yielding impressive returns, making it one of Buffett’s most successful investments over the past decade. As the bank navigates the ongoing sell-off, Moynihan remains optimistic, emphasizing that life will go on as the market adjusts to Berkshire’s decision to reduce its stake.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/11/berkshire-unloads-another-chunk-of-bank-of-america-as-ceo-moynihan-lauds-buffett-as-great-shareholder.html
