Is Warren Buffett losing faith in Bank of America, or is this just a savvy profit-taking move? On July 17, Warren Buffett’s Berkshire Hathaway made headlines by reducing its stake in Bank of America. The investing giant sold 33.9 million shares, translating to an eye-popping $1.48 billion. The sale took place across three days, from July 17 to 19, with prices ranging from $43.13 to $44.07 per share. This marked the first time Berkshire has trimmed its stake in the banking behemoth since the fourth quarter of 2019.
The market didn’t take long to react. Bank of America’s (BAC) shares witnessed a dip—dropping about 1.5% in pre-market trading and another 1% during intraday trading following the news. This decline comes after an impressive 27.4% rally in Bank of America’s shares in 2024, soaring to their highest levels since March 2022.
Despite this sizeable sale, Berkshire Hathaway is far from cashing out completely. The company still holds a massive 999 million shares, valued at over $42 billion. This significant holding equates to an almost 13% stake in Bank of America, reaffirming Berkshire’s position as one of the bank’s largest shareholders.
Experts and analysts have reacted cautiously to the news. While Berkshire’s reduction in stake might appear bearish at first glance, it’s crucial to analyze stocks based on multiple parameters. Berkshire’s remaining substantial investment suggests long-term confidence. Moreover, Buffett’s strategy typically involves a mix of moves that align with market realities while ensuring shareholder value.
Bank of America’s recent performance hasn’t been without its challenges. The bank reported a 5.7% drop in Q2 profits compared to the same period last year. However, analysts maintain a moderate buy consensus on the stock, with 10 Buy, 5 Hold, and 1 Sell ratings. They project an average price target of $45.16, which implies a 5.3% upside potential from current levels. The bank also boasts a “Perfect 10” Smart Score on TipRanks, indicating a bullish outlook.
So, what does all of this mean for your investments? Buffett’s move to trim his stake can be seen as a profit-taking strategy rather than a loss of faith in Bank of America. While the short-term dip in share prices might create some unrest, the bank’s long-term fundamentals remain strong. With Berkshire maintaining its position as a major shareholder and analysts projecting modest gains, there are still many reasons to be optimistic.
| Category | Data |
|---|---|
| Company | Berkshire Hathaway (BRK.A, BRK.B) and Bank of America (BAC) |
| Sale Details | Sold 33.9 million shares for $1.48 billion (range: $43.13-$44.07) |
| Date of Sale | July 17-19 |
| Ownership Reduction | 8.8% since mid-July |
| Remaining Shares | 999 million shares, valued at over $42 billion |
| Remaining Stake | 10.8% of Bank of America |
| Bank Performance | Q2 profits dropped 5.7% from the year-ago quarter |
| Analyst Ratings | 10 Buy, 5 Hold, 1 Sell (Moderate Buy consensus) |
| Average Price Target | $45.16 (implying 5.3% upside potential) |
| Bank Rally | BAC rallied 27.4% in 2024 |
