Berkshire Hathaway, run by Warren Buffett, recently trimmed its large holding in Bank of America for the first time in over four years. The conglomerate sold 33.9 million shares of Bank of America for nearly $1.5 billion in separate sales over a few days, with an average selling price of $43.56 per share. However, despite the reduction, Bank of America still remains Berkshire’s second largest equity position after Apple, with the conglomerate holding 999 million shares worth almost $43 billion. Berkshire still holds a 10.8% stake in Bank of America, making it the largest shareholder of the bank.
The decision to trim its holding in Bank of America could potentially be a move to take some profits, as the bank’s stock has rallied by 27.4% since the beginning of the year, reaching its highest levels since March 2022. This reduction in Bank of America shares follows a similar move by Buffett in the first quarter when Berkshire trimmed its holding in Apple by 13% for tax reasons following sizable gains. The news of Berkshire’s sale of Bank of America shares caused a slight dip in the bank’s stock price on Monday.
One of Warren Buffett’s most well-known investments is in Bank of America, which he initially made in 2011 during the aftermath of the financial crisis. Buffett purchased $5 billion worth of the bank’s preferred stock and warrants in order to boost confidence in the struggling lender as it dealt with losses related to subprime mortgages. Buffett famously disclosed that he got the idea to invest in Bank of America while taking a bath. He cited his admiration for CEO Brian Moynihan’s leadership and the bank’s ability to generate profits as reasons for making the investment.
Warren Buffett’s purchase of Bank of America has become a memorable Wall Street tale, with the Oracle of Omaha recalling the details of how the deal came together. Buffett mentioned that he thought of reaching out to Bank of America about the preferred stock investment while sitting in his bathtub. Despite initial difficulties getting through to Moynihan, the deal was finalized within hours. Moynihan confirmed that Buffett had tried to contact him through the bank’s public phone line, only to be rejected by the call center. The successful transaction showcased Buffett’s ability to make major investment decisions quickly and decisively.
Overall, Berkshire Hathaway’s decision to reduce its stake in Bank of America marks the first time in several years that the conglomerate has made such a move. Warren Buffett’s investments in both Bank of America and Apple remain significant parts of Berkshire’s equity portfolio. The decision to trim holdings in Bank of America may be a strategic move to take profits following the bank’s strong performance in 2024, and it aligns with Buffett’s investment philosophy of making adjustments based on market conditions. Despite the reduction, Berkshire still holds a sizable stake in Bank of America, highlighting the long-term commitment and confidence that Buffett has in the bank’s future prospects.
