Last week, Warren Buffett made a significant move by selling around 34 million shares of Bank of America, totaling $1.48 billion, as disclosed in a regulatory filing on Friday.
During the last six months, the bank’s stock has surged by 31.80 percent and within the current month, it has risen by 7.20 percent, as per the latest data from Google Finance. Though the stock saw a 2.48 percent increase in the past five days, on Monday morning, it witnessed a slight dip of 0.26 percent.
Renowned as the “Oracle of Omaha,” Buffett, ranked among the world’s top ten richest individuals by Forbes, is widely acclaimed for his successful investment and trading strategies that have spanned several decades. The investment decisions made by Buffett, who resides in Omaha, Nebraska, where his firm Berkshire Hathaway is headquartered, are meticulously scrutinized by fellow investors.
In 2011, during a U.S. debt-ceiling crisis, Buffett extended a $5 billion lifeline to Bank of America, acquiring preferred stock and stock warrants worth $5 billion, enabling him to purchase 700 million shares of the bank’s common stock at $7.14 per share. These warrants carried a ten-year exercise window.
Bank of America’s CEO, Brian Moynihan, revealed in 2019 that Buffett approached him with a $5 billion investment proposal, to which Moynihan initially declined, asserting the bank didn’t need additional capital. Buffett’s retort was, “I know, that’s why I’m calling,” emphasizing how Berkshire’s cash infusion would enhance the bank’s stability.
The swift agreement between Moynihan and Buffett, reached less than 24 hours after their first discussion, resembled the bailouts offered by Buffett to Goldman Sachs and General Electric during the 2007-2008 financial crisis.
This strategic investment by Buffett bolstered confidence in the bank post the financial turmoil, proving to be a lucrative venture for Berkshire. By August 2017, Buffett had exercised all his warrants, with the common shares received by year-end exceeding $20 billion, as reported by Markets Insider.
Notwithstanding the recent substantial sell-off, Berkshire Hathaway retains a holding of over 998 million Bank of America shares, valued at more than $42 billion, as per Bloomberg data, solidifying its position as one of the bank’s major shareholders.
As of March, Bank of America continues to stand as one of the nation’s largest financial institutions, boasting total assets worth $3.272 trillion on its balance sheets.