US Markets
Monday, July 22nd, 2024 2:20 pm EDT
Key Points
- Berkshire Hathaway sold 33.9 million shares of Bank of America for almost $1.5 billion, marking the first reduction in its stake since 2019, while still holding 999 million shares valued at nearly $43 billion, making it the largest shareholder with a 10.8% stake.
- The sale followed a 27.4% rally in Bank of America’s stock this year, reaching its highest levels since March 2022, and similar profit-taking actions by Buffett, including a 13% trim of Berkshire’s Apple holdings earlier in the year for tax reasons.
- Warren Buffett’s original investment in Bank of America in 2011, inspired during a bath, was intended to shore up confidence during the financial crisis, showcasing his confidence in CEO Brian Moynihan and the bank’s profitability, despite an initial communication hiccup.
Berkshire Hathaway, led by Warren Buffett, reduced its Bank of America holding for the first time in four and a half years following a strong performance by the bank in 2024. The conglomerate sold 33.9 million shares of Bank of America, worth almost $1.5 billion, over three days, with an average selling price of $43.56 per share, as revealed by a regulatory filing. This sale is the first reduction of Berkshire’s stake in the bank since the fourth quarter of 2019. Despite this sale, Bank of America remains Berkshire’s second-largest equity position, following Apple, with Berkshire still holding 999 million shares valued at nearly $43 billion. Berkshire also remains the largest shareholder of Bank of America with a 10.8% stake. The decision to sell may have been influenced by Bank of America’s significant 27.4% rally this year, reaching its highest levels since March 2022. Earlier in the year, Buffett also trimmed Berkshire’s Apple holdings by 13% for tax reasons after substantial gains.
The sale news caused a slight dip in Bank of America’s shares on Monday. Buffett’s initial investment in Bank of America is a well-known Wall Street story. In 2011, during the aftermath of the financial crisis, Buffett invested $5 billion in the bank’s preferred stock and warrants to bolster confidence as the bank dealt with subprime mortgage losses. Buffett later shared that the idea to invest came to him while he was taking a bath. He disclosed this during Berkshire’s 2017 annual meeting, emphasizing his confidence in the leadership of CEO Brian Moynihan and the bank’s profit-generating capabilities. Moynihan recounted that Buffett initially tried to contact him through the bank’s public phone line but was rejected by the call center. Despite this initial hiccup, the deal was finalized within hours.
At 93 years old, Buffett’s strategic moves continue to shape the financial landscape, and his decisions, such as the recent sale of Bank of America shares, are closely watched by investors and analysts alike. His investment decisions are not only driven by market performance but also by his evaluations of company leadership and long-term potential, as demonstrated by his continued significant holdings in both Apple and Bank of America.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/22/warren-buffetts-berkshire-trims-bank-of-america-stake-for-the-first-time-since-2019-after-strong-rally.html
