Warren Buffett’s recent move to dump Bank of America shares has sent waves through the investment community, sparking speculation about his reasoning behind the decision. Berkshire Hathaway, Buffett’s conglomerate, has reduced its stake in the bank for six consecutive trading days, raising questions about the famed investor’s outlook on the financial sector.
In a series of transactions earlier this week, Berkshire sold 18.9 million Bank of America shares at an average price of $42.46, totaling $802.5 million. This move comes as a surprise to many, as Bank of America has outperformed the broader market in 2024, with its stock up over 25% compared to the S&P 500’s 14% increase.
Buffett’s decision to trim his investment in Bank of America could be driven by valuation concerns, as the bank’s performance has exceeded expectations this year. This is a notable shift for Berkshire, as Buffett has historically shown confidence in Bank of America’s leadership and stability. In fact, in 2011, Buffett made a significant investment in the bank to bolster confidence in the wake of the financial crisis.
Despite reducing its stake in Bank of America, Berkshire still holds a substantial position in the bank, with 980.1 million shares valued at $41.3 billion. This move follows Berkshire’s exit from several other bank positions in 2022, including JPMorgan, Goldman Sachs, Wells Fargo, and U.S. Bancorp.
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