Buffett continues to cash out of Bank of America.
Berkshire Hathaway, a subsidiary of Warren Buffett, continued to sell Bank of America on August 23rd, 26th, and 27th according to recent regulatory filings.
Since July 17th, Berkshire Hathaway has reduced its holdings of Bank of America by nearly 13% through a series of selling transactions, with a total cash out amount of up to $5.357 billion.
Since the beginning of this year, Buffett has significantly increased his portfolio adjustment efforts. In the second quarter, he made a significant proportion of adjustments to companies in his investment portfolio, withdrew from the technology sector of the US stock market, and increased investments in the energy, insurance, and beauty industries. It is worth noting that Buffett has sold stocks net for seven consecutive quarters, and Berkshire Hathaway's cash reserves continued to reach new highs at the end of the second quarter.
Buffett's continuous adjustment of his investment portfolio is receiving market attention and recognition, and Berkshire Hathaway's stock price has risen for five consecutive years, with a year-on-year increase of over 30%. On August 28th, Berkshire Hathaway's market value exceeded $1 trillion for the first time, becoming the seventh publicly traded company in the US stock market with a total market value exceeding $1 trillion.
Buffett continuously reduces his holdings of Bank of America stocks
The recent rebound in the US stock market has not shaken Buffett's determination to reduce his holdings in Bank of America, and he continues to reduce his holdings in Bank of America.
According to the latest document from the US Securities and Exchange Commission, Berkshire Hathaway continued to sell Bank of America on August 23, 26, and 27, selling 6.7543 million shares, 10.975 million shares, and 6.9313 million shares of Bank of America, respectively. This is one of the recent documents submitted by Berkshire Hathaway for the sale of Bank of America stocks.
Since July 17th, Berkshire Hathaway has sold a total of 1.29 billion shares of Bank of America, reducing its holdings by nearly 13% and cashing out a total of $5.357 billion.
According to the documents submitted by Berkshire Hathaway on July 19th, the company sold a total of $1.476 billion worth of Bank of America stock for three consecutive trading days from July 17th to July 19th.
The documents submitted on July 24th show that Berkshire Hathaway sold a total of $802 million worth of Bank of America stock for three consecutive trading days between July 22nd and July 24th.
The documents submitted by Berkshire Hathaway show that since July 17th, except for a brief pause in the company's sales pace in early August, it has continued to sell shares of Bank of America.
As of August 27th, Berkshire Hathaway's stake in Bank of America has been reduced to 922 million shares. Based on the latest closing price of $39.67 per share, Berkshire Hathaway holds Bank of America worth $35.854 billion. Berkshire Hathaway remains the largest shareholder of Bank of America, with a latest shareholding ratio of 11.88%.
Bank of America has long held the second position in Berkshire Hathaway's investment portfolio, second only to Apple Inc.
It is worth noting that after continuous reduction, Bank of America's position in Berkshire Hathaway's investment portfolio may continue to decline. Buffett has been buying Bank of America since 2011, and bank stocks were once an important holding for Buffett. In 2022, Berkshire Hathaway began reducing its holdings in banking stocks such as JPMorgan Chase, Goldman Sachs, Wells Fargo, and United Bank of America, but its preference for Bank of America has continued until now.
So far, Buffett has not explained to the market his reasons and intentions for reducing his holdings in Bank of America.
Buffett increases his efforts to adjust positions
It is worth noting that since the beginning of this year, Buffett has significantly increased his portfolio adjustment efforts, making significant adjustments to the companies in his investment portfolio, withdrawing from the technology sector of the US stock market, and increasing investments in the energy, insurance, and beauty industries.
While Buffett adjusted his US stock portfolio, the overall size of his US stock holdings shrank, and his cash holdings increased again. As of June 30, 2024, Berkshire Hathaway's total holdings in the US stock market amounted to $279.969 billion, a decrease of approximately $51.7 billion from $331.68 billion at the end of the first quarter, marking its seventh consecutive quarter of net stock sales. Berkshire Hathaway's cash reserves continued to hit a new high in the second quarter, reaching $276.9 billion.
According to the position information at the end of the second quarter of this year, the top companies in Berkshire Hathaway's investment portfolio are Apple Inc., Bank of America, American Express, Coca Cola, Chevron, Western Petroleum, Kraft Heinz, Moody's, Anda Insurance, and Davita Healthcare.
Berkshire Hathaway significantly reduced its holdings of Apple Inc. from 789 million shares in the first quarter to approximately 390 million shares in the second quarter, a decrease of 50.57%. Berkshire Hathaway's fifth largest holding, Chevron, was also reduced in holdings.
At the same time, Berkshire Hathaway has paid off its holdings of cloud computing company Snowflake and Paramount Universal Pictures.
To the surprise of investors, Berkshire Hathaway has established a position in American beauty retail giant Ulta Beauty, buying 690000 shares in the process. Stimulated by the news, Ulta Beauty surged over 11% the next day, but the company has still fallen 24.21% so far this year. In addition, Berkshire Hathaway also established its first warehouse in aerospace company Haike Aviation.
The company with the highest increase in holdings was Western Petroleum, the sixth largest holding, in which Berkshire Hathaway increased its holdings by 7.2634 million shares in the second quarter. Next is Anda Insurance, which increased its holdings by over 1.1 million shares in the second quarter. In the first quarter of this year, Berkshire Hathaway announced for the first time after three consecutive quarters of secrecy that it had invested heavily in insurance company Anda Insurance. As of the end of the second quarter, Berkshire Hathaway held 27 million shares of Anda Insurance, with a holding value of approximately $6.9 billion, ranking Anda Insurance as Berkshire Hathaway's ninth largest holding.
There are various opinions about the reasons for Buffett's significant portfolio adjustment. Some analysts believe that valuation and taxes may be the reasons why Buffett sold Apple Inc. and Bank of America.
Data shows that Bank of America's stock price has risen by 19.37% since the beginning of this year, surpassing the same period's increase in the S&P 500 index. The current rolling P/E ratio is 13.5 times, while the average multiple in the past two years is 10 times, indicating a significantly higher valuation than in recent years; Apple Inc. rose 18.89% this year, with a rolling price to earnings ratio of 34 times. In addition, in terms of taxation, it cannot be ruled out that selling stocks such as Bank of America is to avoid facing higher tax bills in the future if corporate tax rates rise.
Berkshire Hathaway rises for 5 consecutive days
Buffett's continuous adjustment of his investment portfolio is receiving market attention and recognition.
On August 28th, Berkshire Hathaway's Class A stock closed up 0.75% to $696500, while its Class B stock closed up 0.86% to $464.59. Berkshire Hathaway has achieved five consecutive trading days of gains, with its market value breaking through the $1 trillion mark for the first time, becoming the first non tech company in the United States to reach this milestone.
At present, companies with market capitalization exceeding trillions of dollars in the US stock market include Apple, Nvidia, Microsoft, Google, Amazon, and Facebook.
The US stock market collectively closed lower on Wednesday, with signs of sector rotation reappearing.
Morgan Stanley Fund analysis shows that the expectation of the Federal Reserve cutting interest rates continues to fluctuate in the near future. As a medium to long term factor, the expectation of interest rate cuts fluctuates repeatedly in the short term, resulting in a more passive short-term market response. However, in the medium term, the Federal Reserve will eventually cut interest rates. At the Jackson Hole Conference, Powell said that the time for policy adjustment has arrived, and the timing and pace of interest rate cuts will depend on the balance of data, prospects, and risks. After Powell's speech, the US dollar index and US bond rates quickly declined, while the US stock market rose and the RMB exchange rate rose. In the short term, the expected rebound of the Federal Reserve's interest rate cuts is expected to come to an end, which undoubtedly supports the global stock market.