Berkshire Hathaway has decided to reduce its substantial stake in Bank of America for the first time in over 4½ years. The conglomerate, led by Warren Buffett, sold 33.9 million shares of the bank in separate sales over Wednesday, Thursday, and Friday for nearly $1.5 billion at an average selling price of $43.56, according to a regulatory filing.
This move marks the first time since late 2019 that Berkshire has decreased its stake in Bank of America. Even with the reduction, Bank of America remains the second-largest equity position in Berkshire’s portfolio, following Apple. Berkshire still holds 999 million shares of Bank of America, valued at around $43 billion, making it the bank’s largest shareholder with a 10.8% stake.
The decision to trim the Bank of America holding may be due to the bank’s impressive performance in 2024, with a 27.4% surge in its stock price so far this year, reaching its highest levels since March 2022. In the first quarter, Buffett reduced Berkshire’s Apple holding by 13% for tax purposes after significant gains.
Following the news of Berkshire’s reduced stake, shares of Bank of America experienced a slight decline on Monday. Buffett’s investment in Bank of America has become a notable Wall Street story. In 2011, he invested $5 billion in the bank’s preferred stock and warrants to help restore confidence in the institution during the aftermath of the financial crisis.
Buffett famously shared that he came up with the idea to invest in Bank of America while sitting in his bathtub. At Berkshire’s annual meeting in 2017, he mentioned that he contacted the bank to inquire about the preferred stock while in the tub. The investor was impressed by CEO Brian Moynihan’s leadership and the bank’s profitability.
Moynihan recalled that Buffett initially tried to reach him through Bank of America’s public phone line but was initially rejected by the call center. Despite this hiccup, the deal was finalized within hours. Buffett’s investment in Bank of America has been a successful one, emphasizing his ability to identify valuable investment opportunities.
Overall, Berkshire Hathaway’s reduction in its Bank of America stake reflects a strategic move to capitalize on profits amid the bank’s strong performance in the market. Warren Buffett’s investment decisions continue to be closely watched by investors and analysts alike, given his reputation as one of the most successful investors in history.
