Warren Buffett cuts BofA stake below 10%, letting him trade in secret

A selling spree that began in mid-July has helped his Berkshire Hathaway Inc. reap about $10.5 billion from its massive, years-long investment in the bank, whittling down the holding to 9.99% of the lender’s outstanding shares.

Through 15 rounds of disposals, US rules have required Buffett to disclose trades within a few days. But a regulatory filing Thursday shows the stake is now small enough that Buffett may provide updates quarterly — potentially leaving fellow shareholders in the dark for months if he sells further. 

That may quiet a drama that keeps weighing on the minds of investors.

“At a minimum, we suspect this holder getting below 10% would lift a psychological hurdle and could allow the stock to regain some forward momentum,” Piper Sandler analyst Scott Siefers wrote in a note this month.

Shares of Bank of America rebounded sharply Friday, climbing 5.2% to $42.04 at 2 p.m. in New York, the biggest intraday advance in almost three months.

Berkshire’s stake could still climb back above 10% as early as Tuesday, when Bank of America reports third-quarter results and updates the number of shares outstanding. In July, the Charlotte, North Carolina-based lender announced that it planned to repurchase as much as $25 billion of its stock.

Bank of America’s stock has underperformed throughout the liquidations. It had been No. 1 in the 24-company KBW Bank Index this year as of July 16. Since then, it has been the second-worst performer. In the latest round, Berkshire unloaded $382.4 million of shares over three days.

Buffett, 94, hasn’t commented on why he’s pulling back from the investment, which had long lent his imprimatur to Bank of America Chief Executive Officer Brian Moynihan. The billionaire’s Omaha, Nebraska-based conglomerate plowed $5 billion into the bank in 2011. In 2019, it applied for Federal Reserve approval to boost the holding beyond 10%.

Berkshire remains the bank’s biggest stockholder, with a stake worth about $31 billion, based on Thursday’s closing price. This year’s disposals have already helped the conglomerate recoup more than it paid to acquire the holding.