Warren Buffett sold about $10 billion in Bank of America stock — after slashing his Apple stake by nearly 60%

• Warren Buffett sold 23 percent of his Bank of America stake for about $10 billion as of mid-July.

• Berkshire Hathaway’s American Express stake is now more valuable than its Bank of America bet.

• Buffett cashed in about 56 percent of his massive Apple bet in the first half of this year.

Warren Buffett watched the surprise split of his Apple stake take a knife to another of his biggest holdings: Bank of America.

Prominent investor Berkshire Hathaway sold about 239 million shares, or about 23 percent of its stake in the banking giant between July 17 and Oct. 2, Securities and Exchange Commission filings show.

Buffett, 94, unloaded the stock at prices between about $39 and $44, generating about $10 billion in revenue — and he may not be done selling.

Berkshire reduced its stake from 1.03 billion shares to 794 million shares, reducing its holding from 13.2% to 10.2%. At Thursday’s close, the remaining shares were worth just over $31 billion.

If the conglomerate continues to sell and ceases to be a 10% shareholder, it will no longer have to update the market within two days of most trades involving Bank of America stock.

The Wall Street titan was Berkshire’s second-largest holding after Apple at the end of June — the positions were worth about $41 billion and $84 billion each. Buffett’s American Express stake, worth about $41 billion, is now worth more than his Bank of America bet.

Buffett’s flagship $28 billion stake in Coca-Cola could soon be worth even more if divestments continue or the stock moves the right way. Berkshire is due to disclose the contents of its late-September portfolio in a mid-November filing.

No explanation yet

The “Oracle of Omaha” hasn’t said publicly why he’s ditching Bank of America, but there are a few plausible reasons. They may turn a profit after a good run: The stock has gained about 50% over the past year and hit a two-year high on July 17, the day Buffett began selling.

Buffett has cited the prospect of higher capital gains taxes as a reason to cash in some of his Apple profits, and that could be true for Bank of America as well. Berkshire’s position in Apple was worth around $174 billion at the end of 2023, but Buffett and his colleagues cut it by 56% in the first half of the year.

Based on the cost bases of those positions, Berkshire has quintupled its money in Apple and tripled its money in Bank of America, and has now made a sizeable chunk of those paper gains.

Buffett could also rebalance Berkshire’s $300 billion stock portfolio in line with his smaller Apple bet. Or he might have soured on the prospect of Bank of America; he has left several of his peers, including JPMorgan and Goldman Sachs in recent years.

The story continues

There is also the chance to raise money to make an elephant-sized purchase. But Berkshire has plenty of dry powder for deals: It held a record $277 billion in liquid investments at the end of June, after shedding more than $90 billion worth of stocks in the second quarter.

Billions fall

Buffett’s Bank of America bet dates back to 2011, when he got the idea to invest in the bank while taking a bath. It was initially tied up in the bank’s call center, but eventually reached CEO Brian Moynihan.

The pair agreed that Buffett would invest $5 billion in exchange for $5 billion in preferred stock, paying a 6 percent annual dividend, plus warrants to buy 700 million common shares at a set price at any time in the next decade.

Buffett exercised the warrants in 2017, receiving more than $20 billion worth of common stock at a cost of about $5 billion, which he covered by buying back virtually all of his preferred stock.

True to his reputation as a bargain hunter, Buffett increased his stake in Bank of America in 2020 when the pandemic-hit stock was trading around $25. He acquired about $2.1 billion in 12 consecutive trading days.

It looks like he’s made a killing on the investment, considering he’s now sold nearly a quarter of it for around $40 a share. That’s nearly 60% more than its purchase price in the summer of 2020 and more than five times the roughly $7 it paid for most of the position using warrants.

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