A week before it reports its third quarter earnings, Warren Buffett’s Berkshire Hathaway has cut its Bank of America stake under the 10% limit that requires disclosure of changes in the size of the holding in what US regulators call a "timely manner" (within two days, as against three days in Australia).
A filing late Wednesday night with the Securities and Exchange Commission by Berkshire revealed the sale of more than 9.5 million shares. It was the latest in a series of sales that started in July.
The sale took Berkshire's stake holdings to 775 million shares, or about 9.987%. The sales have delivered more than US$10 billion in cash to Berkshire in a couple of months. The latest sale raised more than US$38 million.
Since the holding is now under the key 10% threshold, Berkshire will be able to take more time to report its related transactions in a timely manner, which will probably be limited to the Fund managers' 13F filing and annual and quarterly reports.
The next 13F filing in mid-November will only reveal Berkshire’s equity holdings as of the end of September. Berkshire remains BofA’s biggest institutional investor.
Buffett took a parcel of US$5 billion of Bank of America preferred stock and warrants in 2011 to shore up confidence in the embattled lender in the wake of the subprime mortgage crisis.
He converted the warrants to shares in 2017, making Berkshire the largest shareholder in the bank. Buffett then added 300 million more shares to his bet in 2018 and 2019.
The recent BofA sales came after Buffett spent the past few years dumping a variety of long-time bank shareholdings, including JPMorgan, Goldman Sachs, Well Fargo and US Bancorp.
Berkshire has also sold down its long-held stake in Chinese EV and battery maker BYD to under 10% this year. However, the big sale this year was halving the company’s stake in Apple in the June quarter.
The Apple sale raised US$88 billion (which was invested in short-dated bonds). The BYD and Bank of America sales have taken the amount raised to well over US$100 billion.
