Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has been on a selling spree when it comes to Bank of America shares. Over the course of 12 consecutive days, Berkshire Hathaway has sold a total of 19.2 million BofA shares, totaling almost $779 million at an average selling price of $40.52 per share. This has resulted in total sales exceeding $3.8 billion, signaling a significant shift in Berkshire’s investment strategy.
With the continuous selling of BofA shares, the bank has now fallen to the No.3 spot on Berkshire’s list of top holdings, behind Apple and American Express. This marks a significant change as BofA was long considered Berkshire’s second biggest holding before the selling spree began. Berkshire still remains the largest shareholder of BofA, holding a 12.1% stake in the bank. The remaining 942.4 million shares held by Berkshire have a market value of $37.2 billion at Thursday’s close price of $39.50.
The decline in BofA shares can be attributed to recession fears plaguing the financial sector, causing the bank stock to drop 5.2% in a single week. This has raised concerns among investors, including Warren Buffett, leading to the decision to sell off a significant portion of BofA shares. Despite BofA’s strong performance year to date, with a growth of more than 17%, the current market conditions have prompted Berkshire Hathaway to reconsider its investment in the bank.
Warren Buffett’s relationship with Bank of America dates back to 2011 when he famously bought $5 billion worth of BofA’s preferred stock and warrants in the aftermath of the financial crisis. This move helped boost confidence in the struggling lender, which was facing losses tied to subprime mortgages. Buffett converted those warrants in 2017, making Berkshire the largest shareholder in BofA. At that time, he expressed his confidence in the business, valuation, and management of the bank. However, recent market conditions and the changing landscape of the financial sector have led to Berkshire Hathaway’s decision to offload a significant portion of its BofA shares.
Warren Buffett’s selling spree of Bank of America shares marks a significant shift in Berkshire Hathaway’s investment strategy. The decision to sell off a substantial amount of BofA shares reflects the current challenges facing the financial sector and signals a reevaluation of Berkshire’s holdings. As the legendary investor continues to navigate the volatile market conditions, it will be interesting to see how his investment decisions evolve in the future.