FRI, AUG 02, 2024

WARREN BUFFETT WATCH

Will Bank of America's stock plunge stop Berkshire's selling streak?

So far, Berkshire Hathaway has been consistently reducing its Bank of America holding even as the bank's stock price gradually slid lower.

In another filing late Thursday night, Berkshire disclosed the sale of 19.2 million shares for almost $779 million (average price: $40.52) on Tuesday, Wednesday, and Thursday.

That extends its selling streak to 12 consecutive trading sessions.

Since that streak began on July 17, Berkshire has sold 90.4 million shares for $3.8 billion, an average of $42.30 per share, reducing its stake by 8.8%.

After three days of relatively larger share sales at the start, Berkshire has been fairly consistently disposing of an average of 6.3 million shares per day, even as the stock fell 10.5% from its two-year-plus closing high of $44.13 on July 16.

It even sold some shares yesterday at BAC's intraday low of $38.98.

(Berkshire's sales, and their implicit message that Warren Buffett has soured on the bank, certainly contributed to the stock's weakness.)

Today, however, BAC's slide accelerated with a 4.9% plunge to a close of $37.58, as bank stocks and the rest of the market were pulled lower by July's weaker-than-expected jobs report.

Because Berkshire has two business days to report its BAC moves, we won't know until next Tuesday if today's price drop ended the selling streak.

And, either way, we probably won't know Buffett's endgame for a while.

If the sales continue, or resume after a pause, he may be looking to bring the BAC stake below 10%, to avoid regulatory burdens, including the requirement to promptly report stock moves.

Or he may be planning to liquidate the entire stake, as Berkshire did with Wells Fargo, JPMorgan Chase, Goldman Sachs, and U.S. Bancorp.

As recently as April of last year, even as Buffett was telling CNBC's Becky Quick he "didn't like the banking business as well as I did before," he seemed committed to Bank of America.

"I invited myself in many years earlier and they made a very decent deal for us [in 2011] and I like [CEO] Brian Moynihan enormously. And I just don't want to sell it."

CNBC Video, April 12, 2023

Berkshire is still Bank of America's largest shareholder with a 12.1% stake of 942.4 million shares with a market value of $35.4 billion.

That's enough to keep the bank as Berkshire's second largest equity holding after Apple's $173.6 million, but it is now only slightly ahead of number three American Express with $35.2 billion.

Did Berkshire sell more Apple?

We may learn tomorrow morning whether Berkshire sold more Apple shares during the second quarter of the year.

After a 1% reduction during last year's fourth quarter, Berkshire cut its Apple stake by almost 13%, roughly $20 billion, in the first quarter.

Answering a shareholder question during this year's annual meeting, Buffett said he expects Apple will remain Berkshire's largest equity position well into the future, calling it an even better business than long-time holdings American Express and Coca-Cola.

But he said he expects capital gains tax rates will be heading higher, so shareholders won't mind paying a lower rate now on the "little" Apple sale rather than a higher rate later.

Berkshire won't be releasing its second quarter portfolio snapshot until the middle of the month, but we are expecting to get an update on its Apple stake from the company's 10-Q quarterly report that's due to be posted tomorrow (Saturday) morning at 8 AM ET at berkshirehathaway.com along with the company's Q2 earnings release.

In previous 10-Qs, Berkshire has listed the market value (in hundreds of millions of dollars) of its five largest equity positions as of the end of the quarter, allowing us to get a good estimate of how many shares it held at the time.

BUFFETT AROUND THE INTERNET

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BERKSHIRE STOCK WATCH

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Twelve months

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Aug. 2, 2024

Berkshire's top holdings of disclosed publicly traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today's closing prices.

Holdings are as of March 31, 2024 as reported in Berkshire Hathaway’s 13F filing on May 15, 2024, except for:

Bank of America, which is as of August 1, 2024
Mitsubishi, which is as of June 12, 2023. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen.
Occidental Petroleum, which is as of June 17, 2024

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

If you aren't already subscribed to this newsletter, you can sign up here.

Also, Buffett's annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire's website.

-- Alex Crippen, Editor, Warren Buffett Watch

900 Sylvan Avenue, Englewood Cliffs, NJ 07632

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