FX168 Financial News Agency (Asia Pacific) reports that the stock market god Warren Buffett's Berkshire Hathaway's Bank of America stocks sell-off frenzy has exceeded $10 billion, he began trimming this huge investment in mid-July, and since then the company's stock price has continued to be under pressure. Market analysis believes that the stock market god may sell until only 0.7 billion shares remain at the original cost.

Fortune reported that in the latest round of financing, Berkshire Hathaway made a profit of $0.383 billion within 3 trading days, with fewer shares sold than in previous rounds. Documents from Berkshire Hathaway show that when the stock price falls to $39, Buffett's selling tends to gradually decrease. On Monday, October 7th, Berkshire Hathaway's stock price closed at $39.96.

(Source: Forbes)

Based on this price calculation, the remaining 10.1% stake of Berkshire Hathaway is worth about $31.4 billion.

According to Barron's, in the last 15 trading days, Berkshire Hathaway has been selling Bank of America stocks almost daily. Its holding percentage in Bank of America has dropped to close to 10.1%, currently owning 0.7845 billion shares, slightly above the short-term disclosed trading threshold of 10%, about 0.776 billion shares, worth about $31.4 billion.

If Berkshire Hathaway continues to sell more Bank of America stocks, its stake in Bank of America will soon fall below 10%. At that time, Berkshire Hathaway will no longer need to submit ownership change documents to the Securities and Exchange Commission (SEC) within 2 business days after the ownership change, only needing to disclose it within a few weeks, usually after the end of each quarter.

Since starting to reduce a large number of Bank of America shares in mid-July, Berkshire Hathaway has sold approximately 0.25 billion shares of Bank of America stock, cashing out over $10 billion. Over the past three months, Buffett has continued to significantly reduce his holdings, causing pressure on Bank of America's stock price to drop. It has dropped by about 10% from the 2024 high of $44 reached on July 17th.

Why did the stock god sell his shares in Bank of America?

In 2011, Buffett invested $5 billion to acquire preferred shares and warrants of Bank of America, initiating his investment in the bank. His actions at the time indicated his confidence in Bank of America CEO Brian Moynihan's ability to restore the bank's health after the 2008 financial crisis.

Buffett expressed his strong liking for Brian Moynihan in April 2023 and stated that he did not want to sell Bank of America stocks. However, Buffett has now significantly reduced his holdings, and the reason for this move is still unclear.

However, previous analyses suggested that Warren Buffett, who has a record of accurately avoiding market peaks multiple times, may not be optimistic about the stock market and economic outlook. This led to large-scale sales of Bank of America shares, continuously converting them into cash to await opportunities. Berkshire Hathaway has already reduced its Apple holdings by nearly half this year. As of the second quarter, the company's cash position has reached $276.9 billion, hitting a historical high.

Regarding when Warren Buffett will stop reducing his holdings in Bank of America stocks, Barron's has previously analyzed that from tax reasons and historical experience, it may continue to sell until the holdings decrease to 0.7 billion shares. Initially, Berkshire Hathaway obtained warrants through a priority investment in 2011, and in 2017 exchanged $5 billion of preferred stock for 0.7 billion common stocks at an average cost of about $7 per share. Then in 2018, it bought over 0.3 billion shares at about $30 per share.

(Source: Barron's)

As the current price of Bank of America shares is around $40, considering that Berkshire Hathaway's original holding cost of 0.7 billion shares is very low, there will be a heavy debt burden when selling the original holdings. Therefore, Buffett may sell until only these original holdings remain.