Warren Buffett has dumped billions worth of Bank of America stock — and the CEO doesn't know why

Berkshire Hathaway has sold more than $7 billion worth of Bank of America stock since mid-July

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Warren Buffett
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Warren Buffett’s Berkshire Hathaway (BRK.A+1.63%) has sold billions worth of Bank of America (BAC+3.33%) shares. Why the legendary investor is dumping the bank’s stock remains a mystery — even to CEO Brian Moynihan.

Buffett first acquired a $5 billion worth of preferred in the second-largest U.S. bank by assets back in 2011, in the aftermath of the U.S. financial and mortgage-backed securities crises. The 94-year-old investor also received stock warrants granting it the right to buy 700 million of the bank’s common shares at a price of $7.14 per share. In 2020, he bought 300 million more shares, pouring billions more dollars into the bank and boosting his stake to roughly 13%, according to FactSet (FDS+0.01%) data.

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This summer, however, Buffett began selling off stock which, at its peak on July 16, reached a value of $44.13 apiece. In the latest sale disclosed Tuesday, Berkshire trimmed 5.8 million of the lender’s shares from Sept. 6-10, worth $228.7 million. In all, Buffett has sold 174.7 million shares worth more than $7 billion since mid-July, bringing his stake to just over 11%, FactSet data shows.

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When asked about the investor’s share sell-off at the Barclays (BCS+7.75%) Global Financial Services conference Tuesday, Moynihan said that while Buffett has been a “great” investor, he doesn’t quite know what his strategy is when it comes to the bank’s stock.

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“I don’t know what exactly he’s doing, because frankly, we can’t ask him,” Moynihan said. “We wouldn’t ask.”

But “life will go on,” Moynihan added, noting that the market has been absorbing the shares and the bank is buying back a portion of its stock. “But he’s been a great investor for our company, and stabilized our company when we needed at the time,” he said.

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Bank of America shares are up nearly 16% so far this year, closing Tuesday at $39.28.

Last month, just days before Buffett’s 94th birthday, his sprawling Omaha-based conglomerate became the first U.S. company outside of the technology sector to hit a $1 trillion market capitalization. As of Tuesday, Berkshire has a market value of $988.83 billion. So far this year, Berkshire has returned nearly 27%, compared with the S&P 500's 16%.