Andrew Bary
Berkshire Hathaway might have continued to pare its large stake in Bank of America in the second quarter, based on information in Berkshire's 10-Q report.
Berkshire didn't disclose individual stock purchases and sales in the regulatory filing for the period reported Saturday in conjunction with the earnings release. But there are some clues in the report.
Berkshire sold about $6.9 billion of stocks in the period and bought around $4 billion. The sales generated a pre-tax gain of $5.3 billion, according to the 10-Q. This means the cost basis of the shares sold was $1.6 billion, or less than 25% of the original purchase price.
A sale of part of Berkshire's stake in Bank of America, which amounted to about 631 million shares at the end of the first quarter, would be consistent with those figures. Berkshire held an 8.5% stake in the bank on March 31.
Bank of America stock traded at an average price of $42 in the second quarter, Bloomberg data show. Barron's estimates Berkshire's cost basis at $7 a share since most of the original stake of over 1 billion shares was purchased about a decade ago via warrants with an exercise price of $7 a share.
The cost basis divided by the Bank of America stock price in the second quarter was around 17%, in line with the reported gains.
A sale of Bank of America in the second quarter would continue Berkshire's reduction in its stake. Berkshire began selling the position in July 2024 and continued selling shares in the first quarter when it unloaded nearly 49 million shares, or about 7% of the stake.
Berkshire CEO Warren Buffett often reduces a stake steadily over time, as he did when he eliminated Berkshire's formerly large bank-stock holdings in JPMorgan Chase, Goldman Sachs, and Wells Fargo in 2020 and 2021 at a fraction of current prices. Berkshire sold its remaining stake in Citigroup in the first quarter of this year.
Buffett has soured on banks in recent years, but kept intact the big Bank of America holding until last year.
Even if Bank of America stock was sold in the second quarter, other stocks likely were sold by Berkshire in the period to make the math work. Berkshire reported a sale of about $200 million of DaVita stock in the period in a Form 4 filing, and other stocks could have been sold.
The Berkshire sales have been a negative for Bank of America's stock price over the past year and in 2025. The stock, now around $45, is the worst performer among its Big Six bank peers over both periods. The shares are up 4% this year while those of industry leader JPMorgan are 22% higher. Wells Fargo analyst Mike Mayo cited the Berkshire effect as a factor in the bank's relatively weak stock price in a client note in June. "Investor Consideration (Away from the Company) -- Sales Decelerating of Big Shareholder," Mayo wrote.
Mayo noted that "a hot investor topic is Berkshire Hathaway's declining ownership over the past 3 quarters. While we don't know Berkshire's endgame, we do highlight the percent of sales has declined each successive qtr after the initial divestment in 3Q24 (starting mid-July 2024)."
Bank of America investors had been hoping that the Berkshire sales might have ended in the first quarter. But it's possible they continued in the second quarter and may keep going in the current quarter as well.
Write to Andrew Bary at andrew.bary@barrons.com
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(END) Dow Jones Newswires
August 04, 2025 13:15 ET (17:15 GMT)
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