Buffett's Berkshire Hathaway Divests $15.3 Billion in Bank of America Stock Amid Economic Speculation

Berkshire Hathaway, led by renowned investor Warren Buffett, recently executed a sweeping sale of its holdings in Bank of America stock. Between August 23 and August 27, Berkshire sold approximately $9.819 billion worth of Bank of America shares. This follows an earlier move from August 15 to August 19, when the firm offloaded about $5.5 billion in shares.
According to SEC filings, from August 23 to August 27, Berkshire Hathaway unloaded around 24.7 million shares of Bank of America common stock. This action marks a significant shift from Berkshire's longstanding investment in Bank of America, where it was the largest shareholder since beginning its stake in 2011. Over time, Buffett had endorsed CEO Brian Moynihan's leadership.
However, this trust appears to be wavering. The 93-year-old investment icon started reducing his Bank of America holdings as early as July, cashing out $3.8 billion over 12 consecutive trading days. After a brief hiatus, the sales resumed in mid-August, further unloading about 14 million shares. So far this year, Berkshire has sold about 120 million shares, still holding roughly 903 million shares valued at $35.8 billion.
This isn't the first time Berkshire has systematically sold off its banking investments. In recent years, Berkshire has divested from multiple banks, including U.S. Bancorp, Wells Fargo, and Bank of New York Mellon.
Buffett has remained tight-lipped about the reasons behind these sales, leading to widespread speculation. Market hypotheses range from concerns over high valuations to broader economic strategies preparing for shifts in Federal Reserve policies. Following the latest U.S. economic data releases, there have been tempered expectations regarding economic recession risks, which aligns with recent indications from the Federal Reserve about potential rate cuts.
Despite this, Bank of America's stock has climbed nearly 20% this year, recently reaching its highest level in over two years with a market capitalization of $307.8 billion.
Buffett’s investment history with Bank of America is longstanding and complex. Berkshire's initial purchase dates back to Q2 2007 at roughly $50 per share, but the position was liquidated by Q4 2010 following the financial crisis. In 2011, Buffett invested $5 billion when the stock was trading around $6 per share, securing favorable terms that included an annual 6% dividend on preferred shares and an option to convert to 700 million common shares at $7.14 each. Berkshire exercised this option in 2017, netting significant gains as the stock had risen to $24 per share at the time.
Over subsequent years, Berkshire became the largest shareholder of Bank of America, making it its second-largest holding after Apple. However, in the past year, Buffett has adjusted his exposure to the financial sector, although he had maintained for a long time that Bank of America was "worth keeping."