Berkshire cuts Bank of America stake below 10%

Warren Buffett’s Berkshire Hathaway cut its stake in Bank of America to below 10 percent amid a selloff that began in mid-July.

In a filing late Thursday with the U.S. Securities and Exchange Commission, Buffett disclosed the sale of more than 9.5 million shares, split between three trades from Tuesday to Thursday. The move reduces his holdings to 775 million shares, or a stake of about 9.987%.

As the holding is now below the key 10% threshold, Berkshire is no longer required to report related transactions in a timely manner. The SEC requires shareholders who own more than 10 percent of a company’s equity securities to report transactions involving the company’s equity within two business days.

Buffett watchers won’t learn the Oracle of Omaha’s next moves for a while. The next 13F filing in mid-November will only disclose Berkshire’s stock holdings as of the end of September. Berkshire remains BofA’s largest institutional investor.

The bank’s shares have risen about 1 percent in the past month, despite Berkshire’s sale. Bank of America CEO Brian Moynihan previously said the market was absorbing the stock, helped by the bank’s own buyback.

Buffett bought $5 billion in Bank of America preferred stock and warrants in 2011 to shore up confidence in the struggling lender in the wake of the subprime mortgage crisis. He converted the warrants into common stock in 2017, making Berkshire the bank’s largest shareholder. Buffett then added another 300 million shares to his bet in 2018 and 2019.

“Very cautious”

BofA’s recent sales come after Buffett has spent the past few years shedding a variety of long-standing holdings in the banking industry, including JPMorgan, Goldman Sachs, Wells Fargo and US Bancorp. Berkshire’s CEO struck a pessimistic tone last year when he opined about banking in 2023. crisis.

“You have no idea what happened to the stickiness of deposits,” Buffett said. “It changed by 2008. It changed through that. And that changes everything. We are very cautious in a situation like this in terms of bank ownership.”

Buffett believes that bank failures in 2008 during the global financial crisis and again in 2023 have eroded confidence in the system, compounded by weak messaging from regulators and politicians. Meanwhile, digitization and fintech have made banking a breeze in times of crisis.