Bank of America: Six straight days of selling … and counting
Berkshire Hathaway sold 52.8 million shares of Bank of America over six straight trading days, Wednesday of last week through Wednesday of this week, reducing its holding by 5.1%.
It still has 980.1 million shares with a market value of $40.8 billion at today’s close of $41.67, its second largest position after Apple’s $172.1 billion, and remains the bank’s biggest shareholder with a 12.5% stake.
According to two SECfilings, Berkshire sold the shares for almost $2.3 billion, which works out to an average price of $43.17.
Because Berkshire owns more than 10% of BofA, SEC rules require it to disclose any stock moves two business days after they are made.
As a result, we won’t know until Monday if the daily selling continued.
It’s the first reduction in the size of the stake since a small trim in the fourth quarter of 2019, even as Berkshire sharply cut or eliminated its holdings in other banks, including Wells Fargo and JPMorgan.
Berkshire may be taking advantage of a bank stock rally that has BofA shares up almost 24% so far this year and 28.6% over the past 12 months, to a more than two-year high.
We don’t know when the selling will stop, but Barron’s Andrew Bary notes that Warren Buffett, who is probably calling the shots on this investment given its large size, “has often continued to sell an equity once he gets started.”
Bary speculates that “as a first step,” Buffett may be trying to bring the BofA stake below 10%, about 780 million shares, freeing Berkshire of the requirement to report any additional stock moves.
In a CNBC interview at the time, Buffett told Becky Quick, “It will be a long, long time before we sell a share of Bank of America … I like the business, I like the valuation, and I like the management very much.”
BYD: Long string of sales brings stake below 5%
After a long series of sales over two years, Berkshire Hathaway has brought its stake in the Chinese electric carmaker BYD below 5%, which means that under Hong Kong exchange rules it will not be required to disclose any future reductions.
The final filing shows Berkshire owned 54.2 million shares as of July 16. which is 4.9% of BYD’s outstanding shares.
It’s a cut of almost 76% from the 225 million shares Berkshire purchased in 2008, at Charlie Munger’s urging, for $230 million. (At the 2009 annual meeting, Munger called BYD a “damn miracle.”)
The remaining stake is currently valued at $1.6 billion.
Buffett has not explained in detail about what’s behind the selling, but he did tell CNBC’s Becky Quick in April last year that while BYD is an “extraordinary company,” he thinks “we’ll find things to do with the money that I’ll feel better about.”
New Berkshire analyst has ‘hold’ rating on the stock
TD Cowen’s Andrew Kligerman imitated coverage of Berkshire Hathaway this week with a “hold” rating.
CNBC Pro’s Yun Li reports Kligerman has a 12-month price target of $697,000, which would be a gain of roughly 6 percent from today’s close of $657,180.
It’s already up 21 percent in 2024.
He’s concerned about weakness in Berkshire’s non-insurance businesses, such as BNSF and Berkshire Hathaway Energy, writing in a note, “Berkshire Hathaway’s old-school conglomerate structure has faced challenges in a number of key areas of late despite being powered by an insurance business that continues to shine.”
