The "stock god" Buffett's Berkshire Hathaway's "clearance style reduction" of holdings in Bank of America is still ongoing, with its shareholding ratio further dropping to 10.3%, approaching a critical regulatory threshold.
According to a new document submitted to the SEC, Berkshire Hathaway reduced its holdings of Bank of America shares for three consecutive trading days on September 25th, 26th, and 27th, 2024, totaling 11.678 million shares and cashing out approximately $461 million. Bank of America is Berkshire Hathaway's third largest holding.
In fact, since mid July, Buffett has sold off Bank of America more than ten times, cashing out about $9.4 billion in total, indicating a potential liquidation. After the latest sale, Berkshire Hathaway still holds a 10.3% stake in the second largest bank in the United States, approaching the "regulatory threshold" of 10%.
It is reported that once the shareholding ratio falls below this threshold, Buffett will no longer need to disclose his trading situation within two working days as he does now. In fact, he himself prefers to buy and sell stocks without quick public disclosure.
Some analysts suggest that if Buffett sticks to his current path, his stake in Bank of America will drop below 10% within about a week, eliminating the need for him to immediately disclose his trades. Once Berkshire's holdings fall below this level, it can switch to providing quarterly updates.
However, even so, based on Friday's closing price, Berkshire Hathaway's remaining shares in the bank are worth nearly $32 billion, making it the largest shareholder of Bank of America.
In 2011, Buffett established Berkshire Hathaway's investment in Bank of America through a $5 billion preferred stock and warrants transaction. For many years, Buffett has been increasing his holdings in Bank of America and praising the bank's leadership, but so far, he has not publicly explained his recent decision to reduce his holdings.
Some analysts believe that the reasons include the overvaluation of Bank of America and the Fed's interest rate cuts after a gap of four and a half years. It is understood that Bank of America is very sensitive to changes in interest rate cycles, and may even be more sensitive than other banking peers.
In March 2022, when the Federal Reserve's most aggressive rate hike cycle in 40 years began, Bank of America gained huge profits from it. The Federal Reserve's aggressive 50 basis point move last week, as well as potential future interest rate cuts, means that Bank of America's net interest income may be more hurt than its peers.
As for whether Buffett's consecutive sell offs really mean clearing his position in Bank of America, it is still unknown. However, according to his habit, when he starts selling a stock, he will eventually clear his position in that stock. Moreover, in recent years, Berkshire Hathaway has liquidated its holdings in several banks, including United Bank of America, Wells Fargo, and Bank of New York Mellon.