Buffett continues to reduce Bank of America stake; sales exceed $3.8 billion

Buffett slashes stake: Berkshire Hathaway, led by billionaire Warren Buffett, has further reduced its holdings in Bank of America, selling more than $3.8 billion worth of the bank's shares since mid-July.

Between July 30 and August 1, Berkshire divested approximately 19.2 million Bank of America shares, generating about $779 million, according to a regulatory filing on Thursday evening.

Berkshire's major share drop

Since July 17, the conglomerate has offloaded a total of 90.4 million shares. Despite these sales, Berkshire remains the largest shareholder of the Charlotte-based bank, holding 942.4 million shares, which represent roughly 12.1 per cent of the total outstanding shares, valued at approximately $37.2 billion.

Berkshire is required to continue reporting its sales until its stake drops below 10 per cent. The company is scheduled to release its second-quarter earnings report on Saturday morning.

The sales followed a significant rise in Bank of America’s stock price, which had increased by about two-thirds since late October and was trading at over 1.2 times its book value. This surge raised the value of Berkshire's holdings to over $45 billion, more than triple the $14.6 billion initially invested.

Berkshire's early investment

Berkshire's investment in Bank of America began in 2011 with a $5 billion purchase of preferred stock, reflecting Buffett’s faith in the bank’s CEO, Brian Moynihan, and his strategy to rejuvenate the bank post the 2008 financial crisis.

In April 2023, Buffett, who is now 93 and one of the most respected investors globally, expressed his admiration for Moynihan and indicated he had no immediate plans to sell the bank’s stock.

Berkshire Hathaway, headquartered in Omaha, Nebraska, operates a diverse portfolio including Geico insurance, BNSF railroad, and numerous other ventures in insurance, energy, industrial, and retail sectors.

(With Reuters Inputs)