This month, Buffett has sold several shares of his "love stock" Bank of America (BAC. US).
On Monday local time, Buffett's Berkshire Hathaway Inc. (BRK.A.US) submitted documents to the U.S. Securities and Exchange Commission showing that the company sold a total of 18.41 million shares of Bank of America common stock from July 25th to 29th, with a total value of approximately $770 million.
Previously, from July 17th to 19th, Berkshire Hathaway sold approximately $1.48 billion worth of 33.89 million shares of Bank of America stock. Between July 22nd and 24th, Berkshire Hathaway once again reduced its holdings of nearly 19 million shares of Bank of America stock, amounting to approximately $800 million.
That is to say, Berkshire Hathaway sold approximately $2.3 billion worth of Bank of America stocks in six trading days. Combined with the recently disclosed reduction information, Buffett reduced his holdings of Bank of America stocks by over $3 billion this month.
Data shows that since 2011, Buffett has been buying Bank of America, which has since become Berkshire Hathaway's second-largest holding, second only to Apple Inc. Buffett has also praised the management of Bank of America multiple times. When talking about holding Bank of America stocks, he once said, "Many years ago, I voluntarily joined and they made a very good deal for us. I really like Brian Moynihan (CEO of Bank of America), and I don't want to sell it
In 2022, Berkshire Hathaway withdrew from several long held bank stocks, including JPMorgan Chase, Goldman Sachs, Wells Fargo, and Bank of America, but not Bank of America.
Buffett's reduction of holdings this year occurred on the second day after Bank of America released its second quarter financial report. On July 16th local time, Bank of America released its second quarter financial report. During the reporting period, the company achieved revenue of $51.195 billion and net profit of $13.571 billion, exceeding market expectations. However, net interest income, which is one of the largest sources of revenue for the bank, fell to $13.7 billion, falling short of market expectations.
Market observers have analyzed that the upcoming interest rate cut by the Federal Reserve may be one of Buffett's logic for reducing his holdings in Bank of America. The profitability of the banking industry largely depends on the net interest margin, which is the difference between bank loan interest rates and deposit interest rates. Normally, a higher interest rate environment helps to widen the net interest margin, thereby increasing the profitability of banks. If the market expects the Federal Reserve to cut interest rates soon, this may lead to a reduction in the net interest margin of the banking industry, thereby having a negative impact on the profitability of banks.
According to analysis, Bank of America's stock has risen 24% this year, outperforming the S&P 500 index's return rate of about 15%. Therefore, Berkshire Hathaway may choose to take profits after Bank of America's stock price rises to its highest level in over two years. Additionally, taxes may also be one of the factors contributing to Buffett's sale of Bank of America stocks. Analysis shows that Buffett's sale of Bank of America stocks may be to avoid facing higher tax bills due to future increases in corporate tax rates.
It is worth noting that Buffett's latest holdings have also been exposed recently. On May 15th local time, Berkshire Hathaway submitted a 13F filing to the US Securities and Exchange Commission website, which showed that the company sold 116 million shares of Apple in the first quarter. As of March 31, Berkshire Hathaway holds 789 million shares of Apple, currently worth approximately $155 billion, accounting for about 40% of Berkshire Hathaway's stock investment portfolio.
In the first quarter, Berkshire also reduced its holdings of HP, Chevron, and Paramount Global. During the quarter, Berkshire sold approximately 23 million shares of HP stock, liquidating its holdings in HP. At the same time, it also reduced its holdings of 3.11 million shares of Chevron stock and sold approximately 55.8 million shares of Paramount Global stock.
As of the end of the first quarter, Berkshire Hathaway's top ten holdings were Apple, Bank of America, American Express, Coca Cola, Chevron, Western Petroleum, Kraft Heinz, Moody's, Anda Insurance, and Davita Healthcare.