Berkshire Hathaway’s Bank of America stake has finally been cut to below the key 10% threshold, keeping Warren Buffett’s next potential moves under wraps for a few months. The conglomerate has reduced its holding in the Charlotte-based lender to precisely 775 million shares, or about 9.987%, after 15 consecutive days of selling. Since the stake is now below 10%, Berkshire is no longer required to report related transactions in a timely manner, meaning within two business days. Investors likely won’t find out Buffett’s exact action until mid-February in the 13F filing that reveals Berkshire’s end-of-year holdings. The next 13F filing in mid-November will only show positions as of the end of September. Still, many observed that the 94-year-old investment icon would need to continue to sell BofA shares for the time being in order to keep his stake below the 10% mark. That’s because CEO Brian Moynihan recently said the bank has been buying back a lot of shares to partly offset the selling from its biggest institutional investor, which reduces the number of shares outstanding. Shares of BofA have held up well during Buffett’s exodus, up 0.6% in the past three months. The stock has gained almost 25% in all of 2024 thus far. BAC YTD mountain Bank of America Since mid-July, Berkshire has sold shares in Bank of America virtually every day (47 days in total) whenever the stock has traded above $39.25, according to Barclays analyst Jason Goldberg. In total, Berkshire has dumped $10.5 billion worth of BAC shares, or 25% of its position. Buffett originally acquired his massive BofA stake in two stages. He famously bought $5 billion of preferred stock and warrants in 2011 to shore up confidence in the embattled lender in the wake of the Global Financial Crisis , and later converted the warrants to common stock in 2017. After getting the Federal Reserve’s approval to raise the holding above 10%, Buffett bought 300 million additional shares in the open market in 2018 and 2019. The first 700 million shares had a low cost basis of only about $7 per share, while the average cost of the next 300 million shares was in the $30s, Goldberg estimated. The analyst said due to tax implications, it’s possible that Berkshire could stop selling once it gets back to 700 million shares, which would take another 16.5 days of sales based on its recent trading patterns. Exiting entirely? It’s also speculated that Buffett could exit the position entirely. The Berkshire CEO has said in the past that he doesn’t like to merely trim positions if his view on the stock has shifted. “When we sell something, very often it’s going to be our entire stake,” Buffett said in 2020 when he entirely dumped his holdings in airlines. “I mean, we don’t trim positions. That’s just not the way we approach it, any more than if we buy a hundred percent of a business, we’re going to sell it down to 90% or 80%.” To be sure, the BofA position could be a unique case due to Buffett’s admiration for the management and the deal he personally negotiated in 2011. Still, Buffett sounded negative towards banking following 2023’s regional bank crisis that took down Silicon Valley Bank, Signature Bank and First Republic Bank. Buffett believes bank failures in 2008 during the financial crisis, and again in 2023, lessened confidence in the entire system, made worse by poor messaging from regulators and politicians. Meanwhile, digitalization and fintech made bank runs a far simpler matter at times of crisis. “You don’t know what has happened to the stickiness of deposits at all,” Buffett said in May 2023. “It got changed by 2008. It’s gotten changed by [the regional bank crisis]. And that changes everything. We’re very cautious in a situation like that about ownership of banks.” Buffett spent the past few years dumping a variety of longtime holdings in the banking industry, including JPMorgan , Goldman Sachs , Wells Fargo and U.S. Bancorp .
