Berkshire reduces Bank of America stake to less than 10%

Warren Buffett's Berkshire Hathaway has cut its stake in Bank of America to below 10% in a sell-off that began in mid-July.

In a Thursday evening filing with the U.S. Securities and Exchange Commission, Buffett announced the sale of more than 9.5 million shares, divided into three transactions made Tuesday through Thursday. The move brings his ownership down to 775 million shares, representing about 9.987% ownership.

Since the participation is now below the relevant 10% limit, Berkshire is no longer obliged to report the related transactions in a timely manner. The SEC requires shareholders who own more than 10% of a company's stock to report transactions affecting that company's equity within two business days.

Buffett watchers won't know the Oracle of Omaha's next moves for some time. The next 13F filing in mid-November will not reveal Berkshire's stock holdings until the end of September. Berkshire remains BofA's largest institutional investor.

The bank's shares rose about 1% last 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 famously bought $5 billion in Bank of America preferred stock and warrants in 2011 to boost confidence in the struggling lender following the subprime mortgage crisis. He converted the warrants into common stock in 2017, making Berkshire the bank's largest shareholder. Then in 2018 and 2019, Buffett added another 300 million shares to his bet.

“Very careful”

The latest BofA sales came after Buffett exited a number of long-standing banking holdings in recent years, including JPMorgan, Goldman Sachs, Wells Fargo and US Bancorp. Berkshire's CEO struck a pessimistic tone last year when commenting on the 2023 banking crisis.

“They have absolutely no idea what happened to the stickiness of the deposits,” Buffett said. “That changed by 2008. This has changed that. And that changes everything. We are very cautious about bank ownership in such a situation.”

Buffett believes bank failures in 2008 during the global financial crisis and again in 2023 weakened confidence in the system, made worse by poor communication from regulators and politicians. Meanwhile, digitalization and fintech made banking operations an easy affair in times of crisis.