Warren Buffett’s Berkshire Hathaway has sold approximately $10 billion worth of Bank of America shares, reducing its stake by nearly a quarter. This divestment follows an earlier decision to cut its Apple holdings by 56%, surprising investors with these two major moves from what were previously his largest equity positions.
Between mid-July and early October, Berkshire offloaded 239 million Bank of America shares, decreasing its ownership from 13.2% to 10.2%, according to Securities and Exchange Commission filings. The shares were sold at prices ranging from $39 to $44, generating substantial proceeds while still leaving Berkshire with a significant $31 billion holding in the bank.
Buffett has not commented on the rationale behind this decision, leaving it open to speculation. One possible explanation is that he might be taking profits after a strong performance; Bank of America shares have risen about 50% in the past year and reached a two-year high just before Buffett began selling.
Tax considerations may also play a role, as Buffett previously cited potential capital-gains taxes as a reason for trimming his Apple stake earlier this year. Berkshire’s long-term investments in both Apple and Bank of America have yielded substantial returns—fivefold for Apple and threefold for Bank of America—and the recent sales may reflect an effort to realize some of those gains.
There is also speculation that Buffett could be building cash reserves for a significant acquisition. Known for his “elephant-sized” deals, he may be positioning Berkshire for a major purchase. However, Berkshire already holds a record $277 billion in liquid assets as of June, having sold more than $90 billion worth of stocks in the second quarter alone.
Buffett’s relationship with Bank of America dates back to 2011 when he made a $5 billion investment after a pivotal call with CEO Brian Moynihan. This deal provided Berkshire with preferred stock yielding a 6% dividend and warrants to purchase 700 million common shares at a fixed price. In 2017, Buffett exercised those warrants, acquiring over $20 billion in common shares at a cost of $5 billion, funded by redeeming his preferred shares. He further increased his stake in 2020, purchasing $2.1 billion worth of shares over 12 consecutive trading days when the stock was trading around $25.
Now, having sold nearly 25% of his stake at around $40 per share, Buffett has realized significant gains on both his 2020 purchases and the warrants he exercised. It remains to be seen whether these sales indicate a broader portfolio rebalancing or preparation for a major acquisition, as investors eagerly await Berkshire’s next moves.
