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buffett has recovered his cost by cashing out bank of america.

documents submitted to regulators by buffett's berkshire hathaway inc. showed that it sold bank of america continuously from september 17 to 19, raising $896 million.

buffett is quite determined to reduce his holdings in bank of america. since july 17, berkshire hathaway has continued to sell bank of america, and has so far received a total of $8.09 billion in cash. based on the latest closing price of $40.87 per share, berkshire hathaway's current holdings in bank of america are worth $34.167 billion.

since buffett built a position in bank of america in 2011, the stock price of bank of america has risen eightfold. roughly speaking, the $8.09 billion of funds returned by berkshire plus the dividends over the years have already recovered the investment cost of its investment in bank of america.

nearly $8.1 billion of holdings were sold off in 2 months

buffett continues to reduce his stake in bank of america.

the latest documents show that berkshire hathaway sold bank of america continuously from september 17 to 19, raising $896 million.

berkshire hathaway has submitted documents to regulators several times over the past two months to sell bank of america shares.

since july 17, berkshire hathaway has sold a total of 1.97 billion shares of bank of america, a 19% reduction in holdings, and has raised a total of us$8.09 billion.

after the reduction, berkshire's holdings in bank of america were reduced to 836 million shares as of september 19. based on the latest closing price of $40.87 per share, berkshire's holdings in bank of america are worth $34.167 billion. berkshire may still be the largest shareholder of bank of america, holding 10.77% of the shares.

before july 17, berkshire hathaway held 1.033 billion shares of bank of america, accounting for 13.08% of the company.

buffett's shares in bank of america originated from his investment in 2011. in 2011, when bank of america's stock price was low, buffett's berkshire hathaway invested $5 billion in bank of america and obtained preferred shares and warrants. a few years later, bank of america increased its dividend payout ratio, and buffett converted it into common stock. data shows that since 2017, bank of america's dividend payout ratio has remained stable at more than 20% each year, and the average annual dividend rate has been around 2%. after several adjustments, berkshire hathaway has gradually become the largest shareholder of bank of america. between 2020 and july this year, berkshire hathaway held 1.033 billion shares of bank of america, and did not reduce its holdings during this period.

since 2011, bank of america's stock price has risen eightfold. roughly speaking, berkshire's investment in bank of america has recovered its investment cost, with the $8.09 billion it has received and the dividends it has received over the years.

why did he drastically reduce his holdings in bank of america? did he sell off his holdings in bank of america? so far, buffett has not explained to the market the reasons and intentions for reducing his holdings in bank of america.

buffett made major adjustments to his portfolio

bank of america has long held the second place in berkshire hathaway's investment portfolio, second only to apple.

after continuous reductions, bank of america's position in berkshire's investment portfolio may continue to decline. buffett began buying bank of america in 2011, and bank stocks were once an important holding for buffett. in 2022, berkshire began to reduce its holdings of bank stocks, such as jpmorgan chase, goldman sachs, wells fargo and u.s. bancorp, but its preference for bank of america remained until july this year.

in addition to bank of america, buffett has made significant adjustments to his investment portfolio in recent years.

in the second quarter of this year, buffett withdrew from the u.s. technology sector and increased investment in energy, insurance and beauty. berkshire hathaway reduced its holdings of apple shares from 789 million shares in the first quarter to about 390 million shares in the second quarter, a drop of 50.57%. berkshire hathaway's fifth largest holding, chevron, was also reduced. at the same time, berkshire hathaway also liquidated cloud computing company snowflake and paramount universal pictures.

in the second quarter, the largest holding was occidental petroleum, the sixth largest holding. berkshire hathaway increased its holdings of the stock by 7.2634 million shares in the second quarter. the second largest holding was chubb, which increased its holdings by more than 1.1 million shares in the second quarter. in the first quarter of this year, berkshire hathaway revealed for the first time its heavy investment in insurance company chubb after three consecutive quarters of confidentiality. as of the end of the second quarter, berkshire hathaway held 27 million shares of chubb, with a holding value of approximately us$6.9 billion, making chubb the ninth largest holding of berkshire hathaway.

the holdings information at the end of the second quarter of this year showed that the top companies in berkshire hathaway's investment portfolio were apple, bank of america, american express, coca-cola, chevron, occidental petroleum, kraft heinz, moody's, chubb, and davita healthcare.

it is worth noting that buffett has been a net seller of stocks for seven consecutive quarters, and the overall size of his u.s. stock holdings has shrunk. however, berkshire hathaway's cash reserves continued to hit new highs at the end of the second quarter, reaching us$276.9 billion.

buffett's continuous adjustment of the investment portfolio has attracted the attention and recognition of the market. on august 28, berkshire's market value exceeded 1 trillion us dollars for the first time, becoming the seventh listed company in the us stock market with a total market value of more than 1 trillion us dollars. berkshire's stock price hit a record high on september 4. the latest data shows that berkshire's estimated increase this year is more than 28%.

the interest rate cut has come into effect, disturbing the us stock market

some media speculated that one of the reasons why buffett sold bank of america shares may be that the bank's valuation was too high, and he was preparing for the fed's monetary policy shift in advance. an american investor believes that the interest rate cut means the arrival of a downturn in bank stocks. because when the fed opens the channel for interest rate cuts, it will weaken the interest income of many banks. once the interest rate is cut, the interest income brought to the bank by loans priced at the benchmark interest rate will begin to decrease.

bank of america previously predicted that if the federal reserve cuts interest rates three times by 25 basis points each time before the end of the year, bank of america expects its fourth-quarter net interest income to be approximately $225 million less than in the second quarter.

most analysts expect net interest income at some large banks to grow more slowly or even decline by 2025.

the u.s. federal reserve announced on september 18 that it would lower the target range of the federal funds rate by 50 basis points to a level between 4.75% and 5%. this is the first interest rate cut by the federal reserve since march 2020, marking the beginning of a new round of easing cycle of u.s. monetary policy.

however, judging from the us stock market, the fed's interest rate cut did not cause much disturbance to the market. on september 19, bank stocks such as bank of america surged.

analysts at citic securities believe that, in terms of fundamentals, the upcoming interest rate cut cycle is generally positive for global banks. the current high interest rate environment has greatly suppressed credit demand, and the continued high interest rate environment also has a negative impact on net interest margins, because the policy interest rate has stabilized at a high level, and corporate borrowing costs have been at a high point in the past 20 years. it is difficult for loan interest rates to continue to rise, but the trend of regular deposits and interest rate increases is deepening. by hedging interest rate risk exposure, the global banking industry has made full preparations for the negative impact of the interest rate cut cycle in the next 2-3 years. some positive factors combined with interest rate risk hedging are enough to offset the negative impact of the interest rate cut process. therefore, the overseas banking industry is currently looking forward to the policy interest rate level gradually falling back to a reasonable position, and the current fed's statement of stabilizing the economy + gradual interest rate cuts will be a more ideal development environment. from the perspective of valuation, after the preventive interest rate cuts without a clear economic recession, the valuation of bank stocks is generally relatively favorable.

in the long run, the brokerage analyst pointed out that for overseas bank stocks, after going through the interest rate cut cycle relatively smoothly in the next 2 to 3 years, the terminal interest rate will be the key to determining the long-term performance of the bank.