Since mid July, Berkshire Hathaway, led by the "stock god" Warren Buffett, has sold stocks of Bank of America, the second largest bank in the United States. After the latest sale on Thursday, Berkshire Hathaway's stake in Bank of America has dropped below 10%.
According to documents submitted to the US Securities and Exchange Commission (SEC) on Thursday evening, Berkshire Hathaway sold over 9.5 million shares of Bank of America stock worth $382.4 million in the past three days (Tuesday to Thursday). This move reduced the company's stake in Bank of America to 775 million shares, with a shareholding ratio of approximately 9.987%.
Due to a shareholding ratio below the critical threshold of 10%, Berkshire no longer needs to report related transactions in a timely manner. The US SEC requires shareholders holding more than 10% of a company's equity to report transactions involving the company's equity within two working days.
Now, Bank of America investors may have to wait for Berkshire Hathaway's quarterly financial report or 13F holdings report to know if the company has sold more Bank of America stocks. The next 13F document submitted in mid November will only disclose Berkshire Hathaway's equity holdings as of the end of September.
Buffett's sell-off of Bank of America may not be over yet. According to Buffett's habit, when he starts selling a stock, he will eventually liquidate that stock.
Berkshire Hathaway remains the largest institutional investor in Bank of America.
On Thursday, Bank of America's stock fell slightly by 0.52% to $39.97. Since Berkshire Hathaway began selling in July, Bank of America's stock price has fallen by about 10%, but the stock has risen slightly by about 1% in the past month. Brian Moynihan, CEO of Bank of America, previously stated that the market is absorbing these stocks thanks to Bank of America's own repurchase program.
In 2011, Buffett purchased $5 billion worth of preferred shares and warrants in Bank of America to boost investor confidence in the struggling bank after the subprime crisis. He converted the stock warrants into common stock in 2017, making Berkshire Hathaway the largest shareholder of the bank. Subsequently, Buffett increased his holdings of 300 million shares of Bank of America stock in 2018 and 2019.
Prudent investment in bank stocks
Prior to the recent sale of Bank of America stocks, Buffett had been selling various long-term holdings of banking stocks in the past few years, including JPMorgan Chase, Goldman Sachs, Wells Fargo, and United Bank of America.
Last year, when the regional banking crisis erupted in the United States, Buffett expressed a pessimistic view.
You have no idea what changes have occurred in the stickiness of deposits, "Buffett said. 2008 changed it. This event also changed it. It changed everything. In this situation, we are very cautious about the ownership of the bank
Buffett believes that the 2008 global financial crisis and the bank failures in 2023 weakened people's confidence in the financial system, and the inadequate information transmission by regulatory agencies and politicians made the situation worse. At the same time, digitalization and financial technology have made bank runs during times of crisis easier.