Warren Buffett's Berkshire Trims Position In Its Second Biggest Stock Holding By $3.2B This Month: What It Means For Investors?

Warren Buffett-led Berkshire Hathaway, Inc. BRKBRK is shaving off its ownership interest in Bank of America Corp.’s BAC, one of its core holdings, and on Monday the investment holding firm disclosed the third sale for the month.

What Happened: In a filing with the SEC late Monday, Berkshire disclosed it sold 18.42 million BofA shares valued at about $767 million, calculated using the weighted average price of the three tranches of transactions it provided. Following the disposal, Berkshire is still left with a massive 961.65 million shares. The firm’s stake in the big bank now stands reduced to 12.49%.

The previously disclosed sales this month are as follows:

• 18.90 million shares valued at $802.49 million (disclosed on July 24)
• 33.89 million shares valued at $1.48 billion (disclosed on July 19)

Cumulative sales of BofA shares by Berkshire for the month was 71.21 million or $3.24 billion in value terms.

The 13-F report filed by Berkshire in mid-May showed that the firm maintained its stake its BofA stake, amounting to 1.03 million shares valued at $39.17 billion, at the end of the March quarter.

See Also: Best Financial Services Stocks

Why It’s Important: BofA along with Apple, Inc. AAPL, American Express Co. AXP, Coca-Cola Co. KO and Chevron Corp. CVX make up the Buffett-led company’s core holding. In the 10-Q report for the first quarter, Berkshire said about 75% of the aggregate fair value of its equity investments was concentrated in these five companies, with the proportion at $34.5 billion in American Express, $135.4 billion in Apple, $39.2 billion in BofA, $24.5 billion in Coca-Cola, and $19.4 billion in Chevron.

The selling has come at a time, the financial stocks are gaining ground on expectations that the Federal Reserve will begin to cut rates. This will likely benefit a big bank like BofA by boosting net interest margin and also trading revenue, given expectations that the financial markets will rally further in the aftermath of the rate cuts.

When Berkshire trimmed its stake in Apple, its biggest holding, in the first quarter, Buffett went on to reassure investors that the tech giant will continue to be its big bet. He attributed the move to the firm’s desire to hold more cash amid an uncertain climate and to raise cash to meet its federal tax obligations.

BofA shares were little changed at $41.09 in premarket trading on Tuesday, according to Benzinga Pro data.

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