Since July, Berkshire Hathaway, led by Warren Buffett, has been continuously reducing its stake in Bank of America. Recently, this selling activity has accelerated: from September 20 to 24, Berkshire sold a total of 21.561 million shares over three consecutive trading days, cashing out about $863 million. This move brings Berkshire's ownership close to the regulatory threshold of 10%, and the total amount sold since mid-July has exceeded $7.5 billion.
As the second-largest bank in the United States, Bank of America has always been Berkshire's third-largest holding. This massive reduction in shares has left the market speculating about Buffett's next move. Although Berkshire still holds 10.5% of the shares as of now, if the stake falls below 10%, Buffett will no longer be required to disclose transactions within two working days, raising suspicions about whether he might completely exit his position in Bank of America.
Looking back at Berkshire's investment in Bank of America, Buffett initially began his foray in 2011 with a $5 billion investment in preferred stock and warrants, gradually increasing his holdings. Over the years, Buffett has repeatedly praised Bank of America's management, but his attitude towards bank stocks has shifted in recent years, leading him to fully divest from Wells Fargo, U.S. Bancorp, and BNY Mellon.
Analysts believe this reduction may be related to Bank of America's sensitivity to interest rate fluctuations. The Federal Reserve's rate hike cycle that began in 2022 helped boost Bank of America's profits, but with recent expectations of rate cuts, the bank's net interest income could be under pressure. Coupled with the current high valuation of Bank of America, Buffett's decision to reduce his stake is understandable.
Nevertheless, Buffett has yet to provide a clear explanation for this significant reduction, and the market is still waiting to see if he will ultimately decide to completely exit his position in Bank of America as he has done in the past. In any case, this sell-off has once again highlighted his strategic adjustments in bank holdings, attracting widespread attention in the financial market.
