Buffett sells over 9.5 million shares of Bank of America stock, holding less than 10% stake, below the "regulatory threshold"
Warren Buffett's Berkshire Hathaway has reduced its stake in Bank of America to below 10%, selling over 9.5 million shares and lowering its ownership to approximately 9.987%. This move exempts Berkshire from the requirement to report related transactions promptly, and observers will have to wait until mid-November to learn about its subsequent actions. Despite the reduction, Bank of America's stock price has increased slightly by about 1% in the past month
According to the Zhitong Finance and Economics APP, in the selling frenzy that started in mid-July, Warren Buffett's Berkshire Hathaway (BRK.A.US) has reduced its stake in Bank of America (BAC.US) to below 10%.
In a filing submitted to the U.S. Securities and Exchange Commission (SEC) on Thursday evening, Buffett disclosed the sale of over 9.5 million shares in three transactions conducted from Tuesday to Thursday. This reduced his holdings to 775 million shares, representing approximately 9.987% ownership.
With the current ownership below the key threshold of 10%, Berkshire Hathaway is no longer required to promptly report its related transactions. Shareholders holding over 10% of a company's equity securities are required by the SEC to report transactions involving the company's equity within two business days.
This will make it difficult for market observers watching Buffett to anticipate the next move of the "Oracle of Omaha" for a period of time. To understand the situation, one will have to wait for the next 13F filing disclosing Berkshire's equity holdings as of the end of September, which is expected to be submitted in mid-November. Currently, Berkshire Hathaway remains the largest institutional investor in Bank of America.
Despite Berkshire selling Bank of America's stock, the bank's share price has still risen by about 1% in the past month. Bank of America CEO Brian Moynihan previously stated that with the help of the bank's own buybacks, the market is absorbing these shares.
In 2011, Buffett purchased $5 billion worth of Bank of America preferred stock and warrants to boost investor confidence in the troubled bank after the subprime crisis. He converted the warrants into common stock in 2017, making Berkshire the bank's largest shareholder. Buffett added 300 million more shares in 2018 and 2019.
"Very Cautious"
Prior to the recent sale of Bank of America shares, Buffett had been selling various long-held bank stocks in recent years, including JPMorgan Chase (JPM.US), Goldman Sachs (GS.US), Wells Fargo (WFC.US), and U.S. Bancorp (USB.US). Last year, Buffett expressed a pessimistic view on a banking crisis in 2023.
Buffett said, "You don't know what the stickiness of deposits will be. By 2008, that had changed. It changed everything. It changed everything. In this scenario, we are very cautious about owning banks."
Buffett believes that the global financial crisis in 2008 and the bank failures in 2023 have weakened people's confidence in the system, while inadequate communication from regulatory agencies and politicians has made the situation worse. Meanwhile, digitization and financial technology have made bank operations simpler during crises
