Warren Buffett's Bold Move: Trimming BofA Stake Nears Regulatory Threshold

Warren Buffett has been actively selling shares of Bank of America (BofA), reducing his stake through his investment firm, Berkshire Hathaway. Over the past three months, the firm has offloaded BofA shares worth nearly $10 billion. The recent disclosures from the U.S. Securities and Exchange Commission (SEC) indicate that between September 30 and October 2, over 8.54 million shares were sold, raising approximately $337.9 million.

This selling activity brings the cumulative sale amount from July to October to about $9.751 billion. After these transactions, Berkshire Hathaway's holding in BofA is nearing what is known as the "regulatory threshold," now standing at 10.2%. U.S. regulations mandate that if holdings exceed 10%, transactions must be disclosed within two days. Below this threshold, disclosures can be deferred and incorporated into quarterly reports.

Buffett's strategic sales since July began with significant sales in July totaling approximately $3.825 billion. The pace eventually slowed, with recent sales falling short of previous averages of $750 million per round, concluding with a total of about $97.51 billion sold from July to early October.

Notably, the remaining shares of BofA that Berkshire holds are valued at roughly $31.1 billion, making it BofA's largest shareholder. While Buffett's intentions aren't explicitly clear, it's observed that when he starts selling, he often completely exits his positions, as seen with U.S. Bancorp and Wells Fargo.

Market experts suggest that Buffett may perceive current market conditions as favoring cash and Treasury securities over equities like those in the banking sector. Despite not explaining his recent sales, Buffett has historically praised BofA's leadership, making this shift particularly intriguing.