Warren Buffett's Berkshire Hathaway has made a significant move by reducing its stake in Bank of America (NYSE:BAC), a leading financial institution. This decision to sell approximately 18.41 million shares, valued at around $770 million, between July 25 and July 29, 2024, is part of a broader strategy that has seen Berkshire Hathaway offload more than $3 billion worth of Bank of America shares over the last month. Despite this reduction, Berkshire Hathaway still retains a substantial ownership stake in the bank, holding about 12.3% of BAC's outstanding shares, which is worth approximately $39.51 billion. This makes Bank of America the conglomerate's second-largest holding after Apple.
The timing of these sales is noteworthy, as they come after Bank of America's stock reached a two-year high, driven by a strong earnings report and growth in investment banking. The bank's stock has rallied 22% in 2024, outperforming the S&P 500's 14.5% return. This surge in stock value presents an opportune moment for Berkshire Hathaway to realize gains from its investment. Buffett's relationship with Bank of America dates back to 2011, when he invested $5 billion during the financial crisis, a move that helped boost confidence in the lender. In 2017, Berkshire became the largest shareholder in Bank of America by converting warrants acquired during the crisis.
The recent sale of 7.53 million shares on July 26, 2024, at a price of $41.7012 per share, as officially filed on July 30, 2024, further demonstrates Berkshire Hathaway's strategic reduction of its stake in Bank of America. Following this transaction, Berkshire Hathaway Inc now holds approximately 966.91 million shares of Bank of America Corp. This insider trading activity, accessible through the SEC website, provides a clear view of Berkshire Hathaway's ongoing adjustments to its investment portfolio.
Interestingly, Buffett has also been reducing his stake in Apple, with a notable sale of 16 million shares in the first quarter of 2024, reducing his position by about 13%. These strategic moves highlight Buffett's ongoing adjustments to Berkshire Hathaway's investment portfolio, reflecting a broader strategy as Buffett anticipates an increase in the federal tax rate on gains. Berkshire Hathaway's investment portfolio is heavily concentrated, with 75% of its investments spread across just five companies, including American Express, Apple, Coca-Cola, and Chevron, alongside Bank of America.
This series of transactions underscores a significant shift in Berkshire Hathaway's investment strategy, capitalizing on the strong performance of Bank of America's stock this year. The decision to sell marks a notable move by the investment firm, securing profits from the bank's robust performance in 2024. Despite the sell-off, Berkshire Hathaway remains a major shareholder in Bank of America, holding a substantial stake that reflects its ongoing confidence in the bank's fundamentals and future prospects.