Warren Buffett’s Berkshire Hathaway sold shares worth $228.7 million in Bank of America in his company’s latest move to offload the bank’s stock, according to a new regulatory filing, as the bank’s chief executive said on the same day that he isn’t sure why Buffett is selling.
The stake sales were made more than a year after Buffett praised Bank of America and CEO Brian Moynihan.
When asked about Buffett’s sell-off of the bank’s shares at a Barclays event on Tuesday, Moynihan said he isn’t sure, adding that the multi-billionaire has “been a great investor for our company” and had “stabilized our company when we needed” it.
Moynihan said the market is absorbing Buffett’s stock sale. Berkshire holds a stake in Bank of America of about 11.1 percent, according to LSEG data.
The Omaha, Nebraska-based company, which is the biggest shareholder of Bank of America, has been trimming its stake in the bank for weeks, with total share sales of nearly $7 billion since July.
Analysts last week speculated that Berkshire is selling the stock to make a profit rather than any broader macroeconomic implications.
“The Berkshire BofA sale is just profit taking after being opportunistic when the stock was much cheaper,” said Christopher Marinac, director of research at Janney Montgomery Scott.
“We don’t know how much further he (Buffett) could sell down shares (if any), but we assume it’s possible he aims to be just below the 10 percent reporting threshold to avoid regulatory scrutiny,” Deutsche Bank analyst Matt O-Connor wrote last week. Berkshire must report its sales to the SEC until its stake falls below 10 percent.
“Buffett and Berkshire Hathaway have likely trimmed the Bank of America stake to right-size it proportionate to Apple after recently halving that stock,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
The investor is not commonly known for profit realization through sales, but he does occasionally realize upside, Schulman said.
Bank of America shares are up nearly 16 percent so far in 2024, closing Tuesday at around $39.28. But in Wednesday’s trading, the bank’s stock dropped by more than 2 percent to $38 per share.
The 94-year-old Buffett, considered one of the world’s most renowned investors, started investing in Bank of America in 2011 when Berkshire purchased $5 billion of preferred stock in the lender.
The sell-off comes in the midst of a precarious period for the three major U.S. stock indexes after the Dow Jones, Nasdaq, and S&P 500 posted their worst weeks in months amid weaker-than-expected jobs reports.
Over the past five days, the Dow has shed more than 2 percent, and as of Wednesday morning, dropped more than 500 points. The Nasdaq is down about 1 percent since Sept. 6.
Federal Reserve policymakers are slated to meet later in September where they are widely expected to vote on a cut to interest rates. Fed chair Jerome Powell said late last month that “time has come” for a cut, noting that inflation has been cooling in recent months.
“Inflation has declined significantly,“ Powell said during the Fed’s annual meeting in Jackson Hole, Wyoming. ”The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic. Supply constraints have normalized. And the balance of the risks to our two mandates has changed.”
Berkshire Hathaway has not immediately responded to an Epoch Times’ request for comment.
