Warren Buffett Reduces Bank of America Stake Amid Speculation

Berkshire Hathaway has been steadily reducing its stake in Bank of America, selling 18.7 million shares between September 3 and September 5, which generated $760 million. This divestment has totaled nearly $7 billion since mid-July, although Berkshire remains the largest shareholder with approximately 864 million shares, representing an 11.1% stake, down about 5% from its peak. Analysts speculate that these sales may be influenced by changing market conditions, particularly the anticipated shifts in monetary policy indicated by the Federal Reserve's Chairman Jerome Powell at a recent symposium. Additionally, the 'Buffett indicator' suggests that stocks are currently overvalued, as it has risen significantly above its historical average. Despite the ongoing sell-off, Berkshire Hathaway's stock reached an all-time high of $484.82 before closing at $464.92, marking a 28.68% increase year-to-date. Warren Buffett's initial investment in Bank of America dates back to August 2011, when he invested $5 billion in preferred stock and warrants, which helped boost the stock price significantly at that time. However, it has taken over a decade for the stock to recover to pre-Great Recession levels. In 2024, Bank of America has experienced a decline of approximately 9.2% since reaching a high of $44.13 in July, coinciding with Berkshire's continued sell-off. The market's reaction to these developments reflects broader trends and investor sentiment regarding the financial sector and economic outlook. As Berkshire Hathaway continues to adjust its holdings, the implications for both the bank and the investment community remain significant.