Warren Buffett and Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) have now sold Bank of America (NYSE:BAC) for six consecutive trading days.
The conglomerate’s last Form 4 revealed that it had sold 18.89 million shares between July 22 and July 24. These shares were sold at average prices ranging between $42.38 and $42.56 worth a total of $802.5 million.
During the past six trading days, Berkshire has sold a total of 52.8 million shares of BAC stock worth $2.3 billion.
Buffett’s sales contrast with his optimism about the bank last year. He said at the time, “I invited myself in, many years earlier, and they made a very decent deal for us. And I like Brian Moynihan enormously, and I just don’t want to, I don’t want to sell it.”
At the same time, Berkshire still owns 980.06 million shares of the bank, equivalent to a 12.5% ownership stake. That means that his sales have made up about 5.4% of his remaining stake.
Berkshire Sells BAC Stock for Six Consecutive Trading Days
Buffett’s history with Bank of America dates back to 2011, when he picked up $5 billion worth of preferred stock and warrants as confidence in the bank was declining. His recent transactions mark Berkshire’s first sales of BAC stock since the fourth quarter of 2019.
At first glance, one may assume that the sales may have been because Bank of America is having a rough year. However, shares of the company are up by 24% so far this year, outperforming the S&P 500’s total year-to-date (YTD) return of 16%.
Buffett isn’t required to disclose the reasoning behind his sales. It could be for diversification reasons instead of a loss of faith in the company. In addition, interest rates are set to drop in September, with the CME FedWatch Tool assigning an 87% chance of a 25 basis point drop and a 12% chance for a 50 basis point drop. The banking industry is highly dependent on the federal interest rate. Still, no one knows the true reasons behind the sales besides Buffett and Berkshire.
Meanwhile, the Oracle of Omaha has been busy scooping up shares of Occidental Petroleum (NYSE:OXY), Liberty Media Corp Series A (NASDAQ:LSXMA) and Liberty Media Corp Series C (NASDAQ:LSXMK) this year.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
