Warren Buffett cuts stake in Bank of America below 10%, trade updates may slow to quarterly basis

The Oracle of Omaha, Warren Buffett (94), has cut his stake in Bank of America Corporation to just below 10 per cent throughout the year, Bloomberg reported. Thus, Berkshire Hathaway can reduce disclosures as per regulatory thresholds.

The Bloomberg report noted that since Berkshire's stake in BoA has dropped to 9.99 per cent, US rules now allow for quarterly updates instead of the previous timeline of a few days after each trade.

In a selling spree that began mid-July, Berkshire Hathaway trimmed BoA stock in 15 rounds to gain $10.5 billion from its long-held investment in the bank. It sold off $382.4 million worth of shares over the last three days, October 10 exchange filings showed, as per the report.

Drama For Investors

For fellow shareholders, however, the slower update requirement means they will not know of any further cuts from Buffett's side for months.

While Buffett has not given reasons for the reduced stake despite being known to back BoA for years and the billionaire's long lent imprimatur to BoA CEO Brian Moynihan, the report added. Berkshire infused $5 billion for stocks in 2011 and applying to the Federal Reserve to increase stake above 10 per cent in 2019.

Notably, Berkshire remains the bank’s biggest stockholder, with its 9,99 per cent stake worth around $31 billion at closing price on October 10.

“At a minimum, we suspect this holder getting below 10 per cent 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.

BoA’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.

(With inputs from Bloomberg)