Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024.
David A. Grogen | CNBC
Berkshire Hathaway trimmed its gigantic Bank of America holding for the first time in four and a half years following the bank’s strong 2024 run.
Warren Buffett’s conglomerate sold 33.9 million shares of Bank of America shares for almost $1.5 billion in separate sales on Wednesday, Thursday, and Friday at an average selling price of $43.56, a regulatory filing showed.
It marked the first time since the fourth quarter of 2019 that the Omaha-based conglomerate has reduced the stake. Still, Bank of America remains Berkshire’s second largest equity position after Apple, holding 999 million shares with a market value of almost $43 billion. Meanwhile, Berkshire is still Bank of America’s largest shareholder with a 10.8% stake.
Berkshire could be taking some profits as Bank of America has rallied 27.4% so far this year to its highest levels since March 2022. In the first quarter, Buffett trimmed Berkshire’s Apple holding by 13% for tax reasons following sizable gains.
Bank of America
Shares of Bank of America dipped slightly on Monday following the news.
Bathtub idea
The Oracle of Omaha’s purchase of Bank of America has become one of the most endearing Wall Street tales. In 2011, the legendary investor bought $5 billion worth of the bank’s preferred stock and warrants to shore up confidence in the lender as it grappled with losses related to subprime mortgages in the aftermath of the financial crisis.
Buffett later revealed that he got the idea while taking a bath in his tub.
“Incidentally, that BofA purchase, it literally was true that I was sitting in the bathtub when I got the idea of checking with … BofA, whether they’d be interested in that preferred,” he said at Berkshire’s annual meeting in 2017, when he first converted the warrants and added the bank stock to his portfolio.
The 93-year-old investor said he was attracted to CEO Brian Moynihan’s leadership and the profit-generating abilities of the franchise.
Moynihan later recalled that Buffett initially tried to reach him through Bank of America’s public phone line, but got rejected by the call center. Despite the snafu, the deal still came together within hours, he said.
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In conclusion, Warren Buffett’s decision to trim Berkshire Hathaway’s Bank of America holdings marks a significant move in the investment world. The legendary investor’s strategic choices always draw attention and spark discussions among analysts and investors alike. Berkshire’s position as a major shareholder in Bank of America continues to be a focal point for market watchers, and any adjustments to this stake are closely monitored.
With Buffett’s keen eye for value and long-term investment strategy, his actions in the stock market are often seen as indicators of broader market trends. The Oracle of Omaha’s bathtub idea that led to the initial purchase of Bank of America’s preferred stock adds a touch of whimsy to his legendary investment portfolio.
As the financial landscape evolves and markets fluctuate, Buffett’s moves remain closely scrutinized for insights into his overall investment philosophy. The recent trimming of Bank of America holdings is just another chapter in the ongoing saga of Warren Buffett’s investment journey.
