Berkshire Hathaway Inc

NYSE:BRK.AUnited States

Andrew Bary Berkshire Hathaway seems to be wasting no time in reducing its big stake in Bank of America. The conglomerate has cut its holding in the banking giant by 5% over the past six trading sessions, unloading about 53 million shares worth $2.3 billion, leaving it with 980 million shares, or a 12.6% interest in Bank of America. Berkshire remains the largest investor in the bank by a wide margin. Its stake is worth about $41 billion, making it Berkshire's second-largest equity behind Apple. Berkshire's sales accounted for a hefty 28% of the daily volume in the stock last Friday and about 19% on three sessions -- this Tuesday and last Wednesday and Thursday, Barron's calculates. The recent Berkshire sales were disclosed in two filings with the Securities and Exchange Commission. The most recent filing came Wednesday evening. The rapid sales by Berkshire could go on since CEO Warren Buffett, who oversees the company's $400 billion equity portfolio, has often continued to sell an equity once he gets started. Barron's wrote earlier this week about this Buffett tendency. That happened with HP Inc., U.S. Bancorp, Paramount Global, and other equity holdings that Berkshire has eliminated in recent years. An unknown question is when Berkshire will stop selling. The company didn't respond to a request for comment. As a first step, Buffett may want to get Berkshire's stake under 10%, which would mean the sale of another 200 million shares. Once Berkshire gets under 10%, which would equate to about 780 million shares, it would no longer have to report its sales within two business days as it must do now. Buffett prefers to buy and sell stocks without quick public disclosure, one reason he generally prefers to hold less than 10% of a company. Buffett appears to be taking advantage of the recent strength in Bank of America stock and the entire banking sector, although Bank of America stock has been trailing those of some peers since the Berkshire sales began. Bank of America stock, at $41.68, closed down 1.2% Thursday while shares of its major peers including JPMorgan Chase and Wells Fargo ended higher. Bank of America stock is up over 20% this year and investors reacted favorably to the company's recent report of second-quarter profits. The recent pressure on the stock -- it peaked at over $44 a week ago -- may reflect concerns that Berkshire's sales will continue. And then there is the effect of Buffett reducing the Berkshire stake, an indication that he feels the stock is fully priced. For bulls on Bank of America, the selling pressure from Berkshire could offer an opportunity to buy shares. Berkshire is fortunate that Bank of America has a highly liquid stock, with the highest daily volume among its peers and among the highest of any stock on the NYSE. This makes it easier to sell a lot of stock. Berkshire is sitting on some big gains with an average cost of about $14 a share. Bank of America is valued at about 13 times projected 2024 earnings. Analyst Mike Mayo of Wells Fargo recently wrote favorably on the bank, saying it should benefit from improved net interest income in part as it reinvests proceeds from low-yielding bonds that are maturing. Corrections & Amplifications Berkshire Hathaway owns 980 million shares of Bank of America. A previous version of this article incorrectly said the company owned 1.08 billion shares. Write to Andrew Bary at andrew.bary@barrons.com This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires July 25, 2024 18:10 ET (22:10 GMT)

Andrew Bary Berkshire Hathaway seems to be wasting no time in reducing its big stake in Bank of America. The conglomerate has cut its holding in the banking giant by 5% over the past six trading sessions, unloading about 53 million shares worth $2.3 billion, leaving it with 980 million shares, or a 12.6% interest in Bank of America. Berkshire remains the largest investor in the bank by a wide margin. Its stake is worth about $41 billion, making it Berkshire's second-largest equity behind Apple. Berkshire's sales accounted for a hefty 28% of the daily volume in the stock last Friday and about 19% on three sessions -- this Tuesday and last Wednesday and Thursday, Barron's calculates. The recent Berkshire sales were disclosed in two filings with the Securities and Exchange Commission. The most recent filing came Wednesday evening. The rapid sales by Berkshire could go on since CEO Warren Buffett, who oversees the company's $400 billion equity portfolio, has often continued to sell an equity once he gets started. Barron's wrote earlier this week about this Buffett tendency. That happened with HP Inc., U.S. Bancorp, Paramount Global, and other equity holdings that Berkshire has eliminated in recent years. An unknown question is when Berkshire will stop selling. The company didn't respond to a request for comment. As a first step, Buffett may want to get Berkshire's stake under 10%, which would mean the sale of another 200 million shares. Once Berkshire gets under 10%, which would equate to about 780 million shares, it would no longer have to report its sales within two business days as it must do now. Buffett prefers to buy and sell stocks without quick public disclosure, one reason he generally prefers to hold less than 10% of a company. Buffett appears to be taking advantage of the recent strength in Bank of America stock and the entire banking sector, although Bank of America stock has been trailing those of some peers since the Berkshire sales began. Bank of America stock, at $41.68, closed down 1.2% Thursday while shares of its major peers including JPMorgan Chase and Wells Fargo ended higher. Bank of America stock is up over 20% this year and investors reacted favorably to the company's recent report of second-quarter profits. The recent pressure on the stock -- it peaked at over $44 a week ago -- may reflect concerns that Berkshire's sales will continue. And then there is the effect of Buffett reducing the Berkshire stake, an indication that he feels the stock is fully priced. For bulls on Bank of America, the selling pressure from Berkshire could offer an opportunity to buy shares. Berkshire is fortunate that Bank of America has a highly liquid stock, with the highest daily volume among its peers and among the highest of any stock on the NYSE. This makes it easier to sell a lot of stock. Berkshire is sitting on some big gains with an average cost of about $14 a share. Bank of America is valued at about 13 times projected 2024 earnings. Analyst Mike Mayo of Wells Fargo recently wrote favorably on the bank, saying it should benefit from improved net interest income in part as it reinvests proceeds from low-yielding bonds that are maturing. Write to Andrew Bary at andrew.bary@barrons.com This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal. Corrections & Amplifications This item was corrected at 6:11 p.m. ET to show that Berkshire Hathaway owns 980 million shares of Bank of America, not 1.08 billion shares. (END) Dow Jones Newswires July 25, 2024 17:10 ET (21:10 GMT)