Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) has sold more of its holdings in Bank of America (BAC), increasing the total to nearly $9 billion over the past few months.
Late Tuesday, the conglomerate announced it had reduced its stake in the nation’s second-largest bank by an additional 21.6 million shares, making a profit of about $862.7 million on the sale.
Berkshire has sold BofA stock in 10 of the past 11 weeks since mid-July, selling a total of 218.5 million shares and earning $8.9 billion on the sale.
Berkshire still owns a 10.5% stake in the nation’s largest bank, and Bank of America’s stock price has fallen by about the same amount since Buffett began selling off his longest-held bank stock position. are.
BofA is still up 16% so far this year, lagging rivals Goldman Sachs (GS), JPMorgan Chase (JPM) and Citigroup (C). The company’s stock price fell slightly on Wednesday morning.
Mr. Buffett and Mr. Berkshire have not yet said anything about their motivation for the sale. And Berkshire remains the bank’s largest shareholder, holding more than 800 million shares worth more than $32 billion.
“I don’t know what he’s doing specifically, because frankly we don’t have to ask,” Bank of America CEO Brian Moynihan said at a Barclays conference earlier this month. Because I can’t do it and I don’t want to hear it.”
Read more: Bank of America Mortgage Review 2024
The recent move is notable given Buffett’s long history with banks. He injected $5 billion into Bank of America in 2011 as the bank struggled to overcome the remnants of the subprime housing meltdown that sparked the 2008-2009 financial crisis.
That investment at the time was a bet not only on Bank of America’s recovery but also on new leadership from CEO Brian Moynihan, who took over the top job in 2009.
“We’re buying stocks, parts of stocks, so life goes on. But he’s been a great investor for our company and stabilized our company when we needed it at the time. ” Moynihan added.
Warren Buffett (left) and Bank of America CEO Brian Moynihan on stage together in Washington, D.C., 2013 (Photo by Drew Angerer/Getty Images) (Drew Angerer, Getty Images) via)
Bank of America’s financial performance is not expected to deteriorate in the near term, according to updated guidance provided by Chief Financial Officer Alastair Borthwick in a press conference on Wednesday.
Interest rate cuts by the Federal Reserve could help the bank as deposit costs fall and its large securities portfolio recovers.
Read more: Fed rate cuts: What they mean for bank accounts, CDs, loans, and credit cards
Net interest income, Bank of America’s main source of loan income, is expected to bottom out in the second quarter and increase from there through the end of the year, the chief financial officer said.
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“We still feel like we’re in that situation,” Borthwick said Wednesday at a London conference hosted by Bank of America.
“We’re now back to a situation of low growth, low inflation, and potentially a reasonable interest rate structure, which should be a pretty good environment for U.S. banks,” Borthwick added.
David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrencies, and other financial areas.
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