Warren Buffett-Owned Berkshire Hathaway’s Stake Sale In Bank Of America Tops $6B: What’s Retail Thinking

Warren Buffett-owned Berkshire Hathaway (BRK.A) (BRK.B) sold over 21 million shares of Bank of America (BAC) through three days last week, reducing its stake in the lender by 14.5% since mid-July, totaling $6.2 billion.

Berkshire’s latest SEC filing shows that it offloaded shares of the bank at prices ranging between $39.9485 and $40.6117. Prior to this, Berkshire sold over 24.66 million shares of the lender at prices ranging between $39.7504 and $39.8692 apiece, raising over $981 million between Aug. 23 and Aug. 27.

Despite the continuous stake sale, Bank of America shares have shown resilience with the stock gaining over 11% in the last one month. And retail sentiment on Stocktwits is mirroring the optimism reflected in the stock price movement, with the sentiment meter shifting into the ‘extremely bullish’ territory (76/100) from the ‘neutral’ zone.

Even after the stake sale, Berkshire Hathaway still remains Bank of America’s largest shareholder, owning over 882 million shares worth nearly $36 billion. The sale comes at a time when Bank of America shares are sitting on huge gains, having risen over 42% in the last year.

The lender reported a decent second quarter with revenue coming in at $25.4 billion, topping an estimate of $25.22 billion. Earnings per share came in at $0.83 versus an estimated $0.80. The bank’s net interest income (NII), the difference between interest earned and interest expended, fell 3% to $13.7 billion as higher deposit costs more than offset higher asset yields and modest loan growth.

Provision for credit losses rose to $1.5 billion, up from $1.3 billion in the first quarter and $1.1 billion in the same quarter a year ago.

Majority of Stocktwits followers of Bank of America are optimistic on the stock, with one user expecting a rally following a rate cut announcement by the Federal Reserve.

Following a dip in the second half of July, Bank of America stock made a smart recovery last month and is currently trading well over its 200-day moving average. Meanwhile, Deutsche Bank has reportedly upgraded the stock to ‘Buy’ from ‘Hold’ while setting a price target of $45.