Buffett cuts BofA stake, unloading $3 billion this month

Christopher Goodney/Bloomberg

(Bloomberg) --One year after Warren Buffett called his multibillion-dollar bet on Bank of America Corp. an investment worth keeping, he's selling it down.

Buffett's Berkshire Hathaway Inc. disclosed its third disposal of shares this month — paring its massive, profitable stake in the lender by a total of more than $3 billion.

The conglomerate, which started building an investment in the bank in 2011 and has long reigned as the top shareholder, sold $767 million of the stock from July 25 to July 29, according to a regulatory filing Monday. That and prior sales this month reduced Berkshire's stake by a total of 6.9%.

Still, Berkshire holds almost 962 million shares, the filing shows — worth $39.5 billion at Monday's closing price.

The sales mark Buffett's biggest pullback from a bet that has long served as a prominent vote of confidence in the stewardship of Bank of America Chief Executive Officer Brian Moynihan. The legendary 93-year-old investor began cashing out in mid-July, when the price was up 31% this year.

The stock has since slid 6.9%. It was little changed in early trading Tuesday at 8:30 a.m. in New York.

A representative for Bank of America declined to comment. Berkshire didn't respond to messages seeking comment outside normal business hours.

Buffett initially plowed $5 billion into Charlotte, North Carolina-based Bank of America at a dark time. The company was facing mounting legal liabilities after the 2008 financial crisis, and shareholders were growing anxious about the toll that was taking on its capital.

Buffett has said he was in the bathtub when he came up with the idea of intervening, arranging to acquire preferred stock and the right to buy common shares. His imprimatur quelled public doubts and soon sent the stock higher, creating a massive paper profit.

Berkshire kept investing in Bank of America in the decade that followed, eventually seeking regulatory approval to amass a stake surpassing 10%. Last year, as Buffett adjusted financial-industry bets and exited some, he called out Bank of America as one to keep.

"I like Brian Moynihan enormously," he said that April. "I just don't want to sell it."