Warren Buffett’s Berkshire Hathaway’s (BRK.A) (BRK.B) sales of Bank of America Corp. (BAC) shares have noticeably slowed down for the third consecutive round, with a stock sale worth $338 million. This time, the sales fetched some of the lowest prices since Buffett began his spree of BAC stock sales back in mid-July.
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Buffett Sold $338M Worth of BAC Stock
According to a company filing, Berkshire Hathaway sold $338 million worth of BAC shares this week, marking the 13th round of stock sales. This figure is significantly lower than the average of about $750 million per round, which typically spanned three days over the past few months.
The average price obtained for the shares on Tuesday and Wednesday was $39.40 per share, notably lower than almost all prior trading days. This dip suggests that Buffett may be willing to accept lower prices to continue his divestment, although the reasons behind this decision remain unclear.
Why Is Buffett Selling BAC Stock?
The current stock sale aside, Buffett has not disclosed why he is trimming Berkshire’s massive stake in Bank of America. Interestingly, even after the most recent sale, Berkshire remains the top shareholder with a 10.2% stake, worth over $31 billion.
Looking back, Buffett first bought $5 billion worth of BAC preferred stock and warrants in 2011, and by 2017, he had converted those warrants into common stock, making Berkshire Hathaway the bank’s largest shareholder. Furthermore, the Oracle of Omaha increased his stake by adding 300 million more shares in 2018 and 2019.
More recently, the sales of BAC shares have come as Buffett looks to reduce his exposure to the banking industry, after shedding longtime positions in other major banks such as JPMorgan (JPM) and Wells Fargo (WFC). This gradual departure from the sector seems to align with Buffett’s sentiments expressed last year, following the regional banking crisis. In fact, he indicated the potential challenges looming within the banking sector, stating, “We don’t know where the shareholders of the big banks, necessarily, or the regional banks or any bank, are heading now.”
Is BAC a Good Buy Right Now?
Turning to Wall Street, BAC has a Moderate Buy consensus rating based on 12 Buys and six Holds assigned in the last three months. At $45.67, the average Bank of America price target implies 16.4% upside potential. Shares of the company have gained about 55.6% in the past year.
