Warren Buffett’s Berkshire Hathaway made a significant move by trimming its huge Bank of America holding for the first time in four and a half years. This decision comes after the bank’s strong performance in 2024. The Omaha-based conglomerate sold 33.9 million shares of Bank of America for nearly $1.5 billion in separate sales over three days. This move marks the first reduction in stake since the fourth quarter of 2019. Despite the trimming, Bank of America remains Berkshire’s second-largest equity position, following Apple, with 999 million shares and a market value of almost $43 billion.
It seems like Berkshire Hathaway may be taking some profits as Bank of America has surged by 27.4% this year, reaching its highest levels since March 2022. In the first quarter, Buffett also trimmed Berkshire’s Apple holding for tax reasons after significant gains. The decision to reduce Bank of America shares could be a strategic move to capitalize on the bank’s recent strong performance and lock in profits.
Warren Buffett’s purchase of Bank of America has become a legendary story on Wall Street. In 2011, Buffett invested $5 billion in the bank’s preferred stock and warrants to boost confidence in the struggling lender during the aftermath of the financial crisis. Interestingly, Buffett revealed that he came up with the idea to invest in Bank of America while taking a bath. This purchase eventually led to him becoming Bank of America’s largest shareholder with a 10.8% stake.
Despite the unconventional setting of the idea generation (in a bathtub), Buffett’s proposal to Bank of America was initially rejected by the call center. However, the deal eventually came together within hours, emphasizing the importance of perseverance and determination in investing. Buffett was drawn to Bank of America’s CEO Brian Moynihan’s leadership skills and the bank’s profit-generating capabilities, which contributed to his decision to invest.
Berkshire Hathaway’s decision to trim its Bank of America holding showcases Warren Buffett’s investment strategy and decision-making process. The move to lock in profits after a strong run by the bank reflects Berkshire’s approach to managing its equity positions. Buffett’s legacy as an investor is further solidified by his unconventional strategies and successful investment stories like Bank of America.