Warren Buffett's Berkshire Hathaway (BRK.A.US) has reduced its stake in Bank of America (BAC.US) below 10% as part of a selling frenzy that began in mid-July.
Buffett disclosed more than 9.5 million shares sold in three transactions on Tuesday through Thursday in a filing to the U.S. Securities and Exchange Commission on Thursday evening. The move reduced his stake to 775 million shares, or about 9.987%.
With its stake below the 10% threshold, Berkshire no longer needs to report its related trades in a timely manner. The SEC requires shareholders who own more than 10% of a company's equity securities to report trades in that company's stock within two business days.
That will leave market watchers in the dark for a while on the next move by the "Oracle of Omaha." The only way to find out will be to wait until the next 13F filing, due in November, which will disclose Berkshire's equity holdings as of the end of September. Berkshire remains the largest institutional investor in Bank of America.
Despite Berkshire's sale of Bank of America shares, the bank's stock has risen about 1% over the past month. Brian Moynihan, the bank's chief executive, said earlier that the market was absorbing those shares with the help of the bank's own buybacks.
Buffett bought $5 billion of Bank of America preferred stock and warrants in 2011 to boost investor confidence in the troubled bank after the subprime mortgage crisis. He converted the warrants to common stock in 2017, making Berkshire the bank's largest shareholder. Buffett added another 300 million shares in 2018 and 2019.
"Extremely cautious"
Before the recent sale of Bank of America shares, Buffett had been selling various long-held bank stocks in recent years, including JPMorgan Chase (JPM.US), Goldman (GS.US), Wells Fargo (WFC.US) and U.S. Bancorp (USB.US). Last year, Buffett expressed a pessimistic view of the 2023 banking crisis.
Buffett said: "You don't know what's happened to the stickiness of deposits. It changed in 2008. It changed. It changed everything. In that situation, we were extremely cautious about our ownership of banks."
Buffett believes the confidence in the system was eroded by the global financial crisis of 2008 and the bank failures of 2023, and that regulators and politicians made matters worse by not communicating effectively. Meanwhile, digitization and fintech have made banks' operations during a crisis easier.