Warren Buffett's Berkshire Hathaway has revealed details of its third sale of Bank of America stock this month, with the company reducing its holdings by over $3 billion since July.
A document submitted to regulatory authorities on Monday (July 29) showed that the company sold 18.4148 million shares of Bank of America stock between July 25 and July 29, totaling $767 million.
Berkshire Hathaway began investing in Bank of America in 2011 and is its largest shareholder. It has long cast a vote of confidence in the leadership of Bank of America CEO Brian Moynihan.
And now, this 93 year old legendary investor is continuously cashing out. In terms of stock price, Bank of America has risen by 22% this year and reached a two-year high earlier this month.
The documents disclosed on Monday, along with the sale earlier this month, reduced Berkshire Hathaway's total holdings by 6.9%, marking Buffett's largest reduction in holdings in a long time.
Despite this, Berkshire still holds nearly 962 million shares after reducing its holdings, valued at $39.5 billion based on Monday's closing price.
The Bond between Buffett and Bank of America
Buffett initially stumbled on Bank of America stocks. Berkshire Hathaway's first purchase of Bank of America stock was in the second quarter of 2007, when it bought 8.7 million shares of Bank of America stock for nearly $50, and then further increased its holdings in the third quarter of that year.
However, the time point of Buffett's opening and adding positions is the critical point that the foam of the US stock market is about to burst. As the market began to decline, Buffett cut half of his positions in the third quarter of 2008 and cleared all positions at a price close to $10 by the fourth quarter of 2010.
After the 2008 financial crisis, the company faced increasing legal liabilities, and shareholders became increasingly concerned about the losses suffered by its capital. In 2011, after experiencing the initial dark period, Buffett invested another $5 billion in Bank of America, whose stock price was around $6 per share at the time.
In this transaction, Buffett received preferred stock with an annual interest rate of 6%, which can be converted into 700 million shares of common stock at a price of $7.14 per share, with a term of 10 years. He called it "inspiration bursting in the bathtub". In 2017, Buffett exercised his stock swap rights, and at that time, the stock price of Bank of America had risen to $24. Buffett's move created huge book profits and became one of his shining moments.
Subsequently, Berkshire Hathaway continued to invest in Bank of America. Until last year, Buffett adjusted his bets on the financial industry and withdrew from some of its stocks, but he pointed out at the time that Bank of America was worth keeping, "I really like Brian Moynihan, I just don't want to sell it