Buffett further cuts Bank of America stake with $863 million disposal

Andrew Harrer/Bloomberg

Warren Buffett's Berkshire Hathaway sold an additional $863 million of Bank of America stock, trimming the conglomerate's stake closer to a 10% regulatory threshold.

Berkshire now owns 10.5% of the second-largest U.S. bank after the latest disposals on the three trading days through Tuesday, according to a regulatory filing. As long as it remains above the threshold, the company must disclose trades within a few days.

Buffett, 94, began trimming the massive investment in mid-July. Even after months of sales, Berkshire's remaining stake in Bank of America is worth $32.1 billion, based on Tuesday's closing price, preserving its perch as the largest shareholder.

The total proceeds from share disposals since mid-July and dividends earned since 2011 have surpassed the $14.6 billion that Berkshire spent to build its stake in the bank. Bloomberg's calculations of Buffett's profits don't include the impact of taxes.

Buffett established Berkshire's Bank of America investment with a $5 billion deal in 2011 for preferred stock and warrants. He converted the stake into common shares six years later, after the bank boosted its dividend. Over the span of his investments, the stock price has multiplied in value.

Buffett has offered no public explanation for his decision to pull back. Commenting can be complicated, as U.S. regulators don't want major bank shareholders potentially exerting influence over lenders.

At the Barclays Global Financial Services Conference on Sept. 10, Bank of America Chief Executive Officer Brian Moynihan told the audience that he can't simply dial up Buffett and ask "what exactly he is doing because frankly we can't ask, and we wouldn't ask."

But "the market is absorbing the stock," Moynihan said. "It's a portion of the volume every day — and life will go on."