One year after that Warren Buffett to rate his multi-billion dollar bet on Bank of America Corp. as an investment worth holding, he is selling it.
Buffett-owned Berkshire Hathaway Inc. announced its third stock sale this month, reducing its huge and profitable stake in the lender by a total of more than $3 billion.
The conglomerate, which began building an investment in the bank in 2011 and has long reigned as the largest shareholder, sold $767 million of the stock from July 25 to July 29, according to a regulatory filing Monday. That sale and other earlier sales this month reduced Berkshire’s stake by 6.9%.
Still, Berkshire owns nearly 962 million shares, according to the filing, worth US$39.5 billion at Monday’s closing price.
Sales represent Buffett’s biggest withdrawal from a long-held bet has served as a prominent vote of confidence in the tenure of Bank of America CEO Brian Moynihan. The 93-year-old legendary investor began withdrawing his shares in mid-July, when the stock price had risen 31% this year.
Since then, shares have fallen 6.9%. In early trading on Tuesday at 8:30 a.m. in New York, there was little change.
A Bank of America representative declined to comment. Berkshire did not respond to messages seeking comment outside of regular business hours.
Buffett initially invested $5 billion in Charlotte, North Carolina-based Bank of America at a dark time. The company faced mounting legal liabilities following the 2008 financial crisis, and shareholders were increasingly concerned about the cost to their capital.
Buffett has said he was in the bathtub when he came up with the idea to step in, arranging the acquisition of preferred stock and the right to buy back common stock. His imprimatur dispelled public doubts and soon drove the stock up, creating a huge profit on paper.
Berkshire continued to invest in Bank of America over the next decade, even seeking regulatory approval to build up a stake of more than 10%.Last year, when Buffett adjusted his bets on the financial sector and abandoned some, he pointed to Bank of America as one of the companies to keep.
“I really like Brian Moynihan”he said that April. “I just don’t want to sell it.”
