TLDR:
- Warren Buffett sold $370 million worth of Bank of America (BAC) stock in October 2024
- The sale reduced Berkshire Hathaway’s stake to 9.97%, just below the 10% regulatory threshold
- This was Buffett’s 16th round of BAC stock disposals since mid-July 2024
- Bank of America’s $3.5 billion stock repurchase in Q3 2024 had briefly pushed Buffett’s stake back above 10%
- Berkshire Hathaway remains Bank of America’s largest shareholder with a stake worth $32.6 billion
Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has once again adjusted his company’s stake in Bank of America (BAC). In a series of transactions that culminated on October 15, 2024, Buffett sold approximately 8.7 million shares of BAC stock, netting around $370 million.
This marks the 16th round of disposals since mid-July 2024, as Buffett continues to fine-tune Berkshire’s position in the banking giant.
The recent sale brought Berkshire Hathaway’s ownership in Bank of America to 9.97%, just below the crucial 10% threshold. This level is significant from a regulatory standpoint, as holdings above 10% require more frequent and rapid disclosure of trades.
By maintaining a stake below this mark, Berkshire gains more flexibility in managing its investment without the need for immediate reporting of every transaction.
This latest adjustment came shortly after Bank of America announced a substantial stock repurchase program. The bank disclosed that it had bought back $3.5 billion worth of its own shares during the third quarter of 2024. This move temporarily pushed Buffett’s stake back above the 10% level, prompting the subsequent sale to bring it back under this regulatory line.
Despite these ongoing reductions, it’s important to note that Berkshire Hathaway remains Bank of America’s largest shareholder. The company’s current stake is valued at approximately $32.6 billion, based on recent market prices. This substantial investment continues to represent a significant portion of Berkshire’s portfolio, accounting for 11.66% of its holdings.
The relationship between Buffett and Bank of America dates back to 2011 when Berkshire made a pivotal $5 billion investment in the bank. This move was seen as a vote of confidence in the institution during a challenging period following the 2008 financial crisis. Over the years, this investment has grown substantially, becoming one of Berkshire’s most successful plays in the financial sector.
While Buffett himself hasn’t publicly commented on the reasons behind these recent sales, market observers speculate on various potential motivations. Some suggest it could be part of a broader strategy to diversify Berkshire’s portfolio, while others point to the regulatory benefits of staying below the 10% ownership threshold.
Bank of America, for its part, continues to perform solidly in the market. As of October 2024, the bank boasts a market capitalization of $327.54 billion and a price-to-earnings ratio of 15.49, indicating healthy profitability. The stock has shown strong performance year-to-date, with a 25.66% increase, reflecting investor confidence in the bank’s operations and future prospects.
The banking sector as a whole has faced various challenges and opportunities in recent years, from navigating the economic impacts of global events to adapting to changing regulatory landscapes and technological advancements. Bank of America, under the leadership of CEO Brian Moynihan, has worked to position itself favorably within this evolving financial ecosystem.
As for Berkshire Hathaway, the company’s investment strategy continues to evolve. While maintaining significant positions in established companies like Bank of America, Buffett and his team have also shown interest in other sectors, including technology and energy.
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