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warren buffett has not stopped selling bank of america shares, cashing out a total of $6.97 billion since the massive sell-off began in mid-july.

it is worth noting that the chicago board options exchange volatility index (vix) has surged since september, soaring by about 49% last week. as the interest rate meeting approaches, whether the volatility risk has not been fully released, investors seem to need to find more clear information and confidence from the economic outlook and the federal reserve's monetary policy.

cashing out nearly $7 billion

according to a new document recently submitted to the sec, berkshire hathaway reduced its holdings of bank of america shares for three consecutive trading days on september 3, 4 and 5, 2024, totaling 18.746 million shares, cashing in approximately us$760 million.

(berkshire's record of reducing its holdings in bank of america this week: sec)

currently, berkshire is still the largest shareholder of bank of america, holding about 11% of the shares of bank of america. according to the latest closing price, it is worth about 33.5 billion us dollars. it is worth noting that if buffett continues to sell shares of bank of america, the shareholding ratio may soon fall below the regulatory threshold of 10%. according to relevant regulations, if the shareholding ratio does not exceed 10%, buffett will no longer need to disclose the transaction within two working days as it does now, and may usually have to wait for several weeks to disclose it in each quarterly report.

according to previously released financial reports, bank of america's second-quarter revenue grew 1% to $25.4 billion, higher than the market's expectation of $25.2 billion; earnings per share were $0.83, higher than the market's general expectation of $0.80. after bank of america's second-quarter earnings exceeded expectations, its stock price hit a two-year high on july 16. on the second day after bank of america's stock price hit a new high, berkshire began a nearly two-month sell-off.

in july, berkshire hathaway sold off a large amount of bank of america shares. throughout july, the company sold a total of about $3.825 billion of bank of america shares.

in august, berkshire hathaway continued to reduce its holdings. from august 15 to 19, it sold about $550 million of bank of america shares; from august 23 to 27, it sold about $981.9 million of shares; from august 28 to 30, berkshire hathaway further sold about 21 million shares of bank of america, cashing in about $848 million. in july and august, berkshire hathaway cashed out a total of about $6.205 billion.

in september, buffett did not stop selling bank of america shares. berkshire hathaway reduced its holdings of bank of america shares for three consecutive trading days on september 3, 4 and 5, 2024, totaling 18.746 million shares, cashing in about us$760 million.

to sum up, berkshire has cashed out a total of approximately us$6.97 billion since it sold bank of america shares on july 17.

buffett, 94, began investing in bank of america in 2011 by purchasing preferred shares and warrants for $5 billion. his berkshire hathaway eventually became the bank's largest shareholder and has remained that position ever since. he has previously said he bought bank of america because he was confident in ceo brian moynihan's ability to restore the bank to health after the 2008 financial crisis.

analyst: buffett's start to reduce his "permanent holdings" raises concerns

warren buffett's berkshire hathaway has performed well over the past year, with an annualized return of 32%, far outperforming the s&p 500. on august 28, it became the first non-tech u.s. company to have a market value of more than $1 trillion. however, buffett's recent moves to reduce his holdings in apple and bank of america have raised concerns about his long-term investment strategy. buffett has invested in bank of america since 2011 and has expressed confidence in the bank's recovery after the financial crisis. nevertheless, the recent reduction in stock holdings seems to be contrary to his past long-term holding strategy.

according to buffett's habit, when he starts selling a stock, he will eventually sell it off. in recent years, berkshire has sold off the stocks of many banks, including u.s. bancorp, wells fargo, and bank of new york mellon.

doug kass, a market analyst and columnist for thestreetpro, expressed concern about buffett's stock selling strategy, especially the reduction of apple and bank of america stocks, which are considered "permanent holdings." he pointed out that buffett's significant reduction of apple shares in the second quarter of this year, selling almost half of his holdings, may be an important statement to the market, showing that his view of the market may have changed. in addition, kass also believes that buffett's view on the outlook for the us and global economy may be more pessimistic than he has publicly expressed.

in addition, kass said, "buffett's favorite stock market indicator has been sending a sell signal for months."

(blue is the buffett index and red is the s&p 500 index. source: macromicro)

generally speaking, if the "buffett indicator" is less than 50%, it means that the stock market is seriously undervalued; 75% to 90% means that the valuation is relatively reasonable; more than 115% means that it is seriously overvalued. currently, the indicator exceeds 190% and is approaching the level of 200%. the indicator broke through the 200% level in february 2021. buffett warned that if this level is broken, it would be "playing with fire." however, like other indicators, the "buffett indicator" also has shortcomings. for example, it does not take into account high interest rates. the current target of the federal reserve's federal funds rate is at its highest level in more than 20 years.

as investors digest the evolution of the ai ​​theme, volatility in the stocks of chipmakers such as nvidia and other companies may continue. for money managers who want to invest for the long term, this may mean an opportunity. kass said that if someone gave him new money today, he would actively increase his holdings of some ai-related stocks.