Buffett Sells $1.48 Billion BofA Stocks As Bank’s Interest Income May Sag

Few, if any, billionaire money managers garner attention on Wall Street quite like Warren Buffett.

Buffett sent nearly 33.9 million shares of BofA to the chopping block. I Photo: Bank of America

Since becoming CEO of Berkshire Hathaway in 1965, he's overseen an aggregate return in his company's Class A shares of a scorching-hot 5,268,713%, as of the closing bell on July 19, Sean Williams reported for Motley Fool.

On Friday, July 19, Berkshire Hathaway filed a Form 4 with the Securities and Exchange Commission (SEC) detailing trading activity in one of Buffett's core holdings, Bank of America (BofA). BofA has been Berkshire's second-largest holding, trailing only Apple.

From July 17 through July 19, Berkshire sold 33,890,927 shares of BofA stock for $1.476 billion.

Buffett also sold $56.09 billion of equities from Oct. 1, 2022, to Mar. 31, 2024, a small segment of Berkshire’s 44-stock, $407 billion investment portfolio, indicating that he sees the stocks as pricey. BofA is no longer a screaming bargain relative to its book value.

The third reason that might justify why Buffett dumped Berkshire's second-largest holding is share buybacks. When the U.S. economy is firing on all cylinders, banks reward their shareholders with hearty dividends and buybacks.

When given the green light by the Fed, BofA has been known to return in excess of $20 billion annually to its shareholders via dividends and share buybacks (on a combined basis).

The fourth reason the Oracle of Omaha may have chosen to part ways with almost $1.5 billion worth of BofA stock is tax-related.

Buffett and his crew sold more than 116 million shares of Apple, equating to roughly 12.8% of Berkshire's stake, as of December 31, and they have to pay tax. Fifth, a shift in monetary policy may adversely impact BofA's net interest income.

To avoid that, Buffett sent nearly 33.9 million shares of BofA to the chopping block.