Buffett's $5.4B Bank of America share sales have led to a 10% stock price drop, signaling a shift in his holdings.
Despite selling, Buffett's Berkshire remains Bank of America's largest shareholder, with 903.8 million shares worth $35.9 billion.
Berkshire sold 389M Apple shares in Q2, yet retains 400M shares, raising questions about Buffett's broader market strategy.
Warren Buffett has once again sold a substantial amount of Bank of America stock. This week, regulatory filings revealed the sale of an additional $982 million worth of shares between August 23 and August 27. This sale is part of a broader trend of Buffett trimming his holdings in the second-largest U.S. bank, reducing his stake by 13% since mid-July. The recent sales brought the total proceeds to $5.4 billion.
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Despite these sales, Berkshire Hathaway remains the largest shareholder in Bank of America, holding 903.8 million shares valued at $35.9 billion based on the bankâs closing price on Tuesday. These disposals have not only raised eyebrows but also led to a notable decline in the stock's price. Bank of America shares were up by 31% this year prior to Buffettâs sales but have since slipped by 10%, closing at $39.67 on Tuesday.
Bank of America Shares Continue to Decline
The consistent reduction of Berkshire Hathaway's stake in Bank of America comes after a decade-long investment that began in 2011. Buffett initiated this position when Bank of Americaâs stock was trading near $5 per share. This investment has been highly profitable for Berkshire Hathaway over the years, serving as a testament to Buffett's approval of the leadership of CEO Brian Moynihan.
However, the decision to reduce the stake, despite the stockâs strong performance earlier this year, raises questions about Buffett's long-term view of the bank. Notably, he has yet to publicly disclose his rationale for the sales. Bank of Americaâs stock price has declined following the series of transactions, and further pressure may be expected as Buffett continues to sell.
Broader Market Activity by Buffett and Berkshire Hathaway
Beyond Bank of America, Buffett has also been reducing his stake in other notable companies. In the second quarter of 2024, Berkshire Hathaway sold over 389 million shares of Apple Inc., though the firm still retains 400 million shares in the tech giant. These moves have drawn attention, especially given Berkshire's growing cash reserve, which now stands at $189 billion.
Some analysts, such as Chris Bloomstran, suggest that the growing cash pile does not necessarily indicate bearish sentiment. However, others, like Ross Gerber, argue that Buffett's strategy may overlook the potential of emerging technological investments. Bank of Americaâs stock saw a slight further dip in after-hours trading, highlighting the marketâs reaction to Buffettâs decisions.
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