Warren Buffett speaks prior to Berkshire Hathaway’s annual shareholder meeting in Omaha, Nebraska on May 3, 2024.
David A. Grogen | CNBC
Warren Buffett’s Berkshire Hathaway has cut its stake in Bank of America to less than 10% amid a selloff that began in mid-July.
In one Thursday evening report Together with the U.S. Securities and Exchange Commission, Buffett announced the sale of more than 9.5 million shares in three transactions from Tuesday to Thursday. The move reduces his holdings to 775 million shares, or a stake of about 9.987%.
Since the stake is now below the key 10% threshold, Berkshire is no longer obliged to report related transactions in a timely manner. The SEC requires shareholders who own more than 10% of a company’s stock to report transactions involving that company’s equity within two business days.
Buffett watchers won’t find out the Oracle of Omaha’s next moves for a while. The next 13F filing, in mid-November, won’t reveal Berkshire’s stock holdings until late September. Berkshire remains BofA’s largest institutional investor.
The bank’s shares are up about 1% over the past month, despite the Berkshire sale. Bank of America CEO Brian Moynihan previously said the market is absorbing the shares, helped by the bank’s own buybacks.
Buffett bought $5 billion worth of Bank of America preferred stock and warrants in 2011 to boost confidence in the embattled lender in the wake of the subprime mortgage crisis. He converted the warrants into common stock in 2017, making Berkshire the bank’s largest shareholder. Buffett then added another 300 million shares to his bet in 2018 and 2019.
‘Very careful’
The recent BofA sales came after Buffett dumped a variety of longtime banking sector holdings in recent years, including JPMorgan, Goldman Sachs, Wells Fargo and US Bancorp. Berkshire’s CEO struck a pessimistic tone last year when he spoke about the banking sector in 2023. crisis.
“You don’t know at all what happened to the stickiness of deposits,” Buffett said. “It changed in 2008. It changed because of that. And that changes everything. We are very careful in such a situation when it comes to bank ownership.”
Buffett thinks the banks went bankrupt in 2008 global financial crisisand again in 2023, confidence in the system declined, exacerbated by poor reporting from regulators and politicians. Meanwhile, digitalization and fintech made the bank a simple matter in times of crisis.