Analysts speculate selling by Buffett could be behind recent Bank of America weakness​on February 9, 2025 at 11:43 am

Two Wall Street analysts believe that Bank of America’s recent weak performance is due to continued selling from Warren Buffett’s conglomerate.Two Wall Street analysts believe that Bank of America’s recent weak performance is due to continued selling from Warren Buffett’s conglomerate.   Bank of America has lagged its peers since the lender’s stellar fourth-quarter earnings report, leading some analysts to speculate that Berkshire Hathaway , the biggest investor in the nation’s second-largest bank, has been quietly offloading shares again. Since its latest quarterly report on Jan. 16, Bank of America shares are little changed, compared to a 2% gain for the S & P 500 and a 4% advance for SPDR S & P Bank ETF (KBE) over the same span. The underperformance is even more notable since Bank of America posted results that topped expectations thanks to better-than-expected investment banking and interest income. Fourth-quarter profit more than doubled to $6.67 billion, or 82 cents per share, from a year earlier. Closely-watch net interest income rose 3% to $14.5 billion, topping estimates by about $170 million. BAC KBE 1M mountain Bank of America has lagged a leading bank ETF over the past month Two Wall Street analysts believe that the weak performance is due to continued selling pressure from Warren Buffett’s conglomerate. “Is Warren in the room with us now?” Truist Securities’ John McDonald asked in a note to clients. “Some investors are questioning whether part of the post-4Q underperformance is selling pressure from Berkshire Hathaway,” after large sales in the second half of 2024, he said. Reducing the stake Last year, Omaha-based Berkshire began a selling spree in what had once been its second-biggest stock holding behind Apple . Berkshire ultimately reduced its stake to below 10%, at which point it was no longer required to report what are known as “related transactions” in a timely manner. Wolfe Research’s Steven Chubak said the recent price action in BofA “strongly indicates” that Berkshire has continued to reduce its position. “While it’s still too soon to give the all clear, we sense investors are growing more comfortable handicapping this technical overhang, and would look to lean in gradually as we are confident the stock will inflect [and the ] valuation gap will narrow, but [are] less certain on timing,” Chubak said in a note. Investors will get a clearer picture when Berkshire releases its 13F filing to the Securities and Exchange Commission on Feb. 14, which will show its stock market holdings as of the end of 2024. Buffett’s widely-read annual letter to shareholders, to be released at the end of this month, might also reveal what the latest thinking is by the “Oracle of Omaha,” on the markets in general and Bank of America in particular. Chubak estimated that Berkshire’s next 13F could show a leaner position of about 7% at the end of 2024, and guesses the holding today might be closer to 5.5% or 6%. Buffett famously bought $5 billion of Bank of America preferred stock and warrants in 2011 to shore up confidence in the embattled lender in the wake of the subprime mortgage crisis. He converted the warrants to common stock in 2017, making Berkshire the largest shareholder in the bank. Buffett then added 300 million more shares to his investment in 2018 and 2019. — CNBC’s Michael Bloom contributed reporting.