Bank of America (BAC) stock is trading notably lower Wednesday after regulatory filings revealed that Warren Buffett's holding company, Berkshire Hathaway (BRK.B), sold more of its stake in the banking giant.
In a Securities and Exchange Commission (SEC) filing, Berkshire Hathaway reported the sale of about 5.8 million Bank of America shares, with the selling price ranging between $39.29 and $39.67 per share. The selling started on September 6 and ran through September 10.
All told, Berkshire Hathaway sold about 174.7 million shares of BAC stock over that time frame for about $7.2 billion, bringing its holding down to 858.2 million shares, according to CNBC. This knocks Bank of America down to the third-largest position in the Berkshire Hathaway equity portfolio, with the financial stock now perched behind Apple (AAPL) and American Express (AXP). Prior to the stock sales, Bank of America was Buffett's second-largest holding.
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"I don’t know what exactly he's doing, because frankly, we can't ask him," said Bank of America CEO Brian Moynihan after being asked about Warren Buffett's selling during Barclays Global Financial Services Conference, according to CNBC. "But on the other hand, the market's absorbing the stock."
Berkshire has been paring back on its BAC stake in recent months and it halved its position in tech giant Apple (AAPL) in Q2. Buffett touched upon the selling of Apple at the annual Berkshire Hathaway meeting in May, saying he still believes in the economics of the tech giant's business but cut his stake in AAPL for tax purposes.
Is Bank of America stock a buy, sell or hold?
Bank of America has outperformed the broader market on a total return basis (price change plus dividends) so far in 2024, up 19% vs the S&P 500's 16% gain. And Wall Street is bullish on the financial stock.
According to S&P Global Market Intelligence, the average analyst target price for BAC stock is $45.53, representing implied upside of nearly 20% to current levels. Additionally, the consensus recommendation is Buy.
But not everyone has gone all in on the large-cap stock. Financial services firm CFRA Research, for instance, has a Hold rating and $39 price target on BAC stock.
The financial firm has seen "no growth on loans and deposits for the last two quarters," said CFRA Research analyst Kenneth Leon in an August 6 statement. Additionally, "BAC card income declined from late 2023 and we think the American consumer (middle class) is stressed with inflation and living costs."
Leon adds that investment banking will benefit other large banks over Bank of America. The analyst's $39 price target is roughly in line with where BAC is currently trading.
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