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Berkshire slashes Bank of America stake to under 10%

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Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 

David A. Grogen | CNBC

Warren Buffett’s Berkshire Hathaway has reduced its stake in Bank of America to below 10% amid a selling spree that started in mid-July.

In a Thursday night filing with the U.S. Securities and Exchange Commission, Buffett disclosed the sale of more than 9.5 million shares, split between three transactions made from Tuesday to Thursday. The move brings his holdings down to 775 million shares, or a stake of about 9.987%.

Since the holding is now under the key 10% threshold, Berkshire is no longer required to report its related transactions in a timely manner. The SEC requires shareholders who own more than 10% of a company’s equity securities to report transactions involving that company’s equity within two business days.

Buffett watchers won’t find out the Oracle of Omaha’s next moves for a while. The next 13F filing in mid-November will only reveal Berkshire’s equity holdings as of the end of September. Berkshire remains BofA’s biggest institutional investor.

Shares of the bank have inched up about 1% in the past month despite Berkshire’s selling. Bank of America CEO Brian Moynihan previously said the market is absorbing the stock, aided by the bank’s own repurchasing.

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 bet in 2018 and 2019.

‘Very cautious’

The recent BofA sales came after Buffett spent the past few years dumping a variety of longtime holdings in the banking industry, including JPMorganGoldman SachsWells Fargo and U.S. Bancorp. The Berkshire CEO struck a pessimistic tone last year when he opined on 2023’s banking crisis.

“You don’t know what has happened to the stickiness of deposits at all,” Buffett said. “It got changed by 2008. It’s gotten changed by this. And that changes everything. We’re very cautious in a situation like that about ownership of banks.”

Buffett believes bank failures in 2008 during the global financial crisis, and again in 2023, lessened confidence in the system, made worse by poor messaging by regulators and politicians. Meanwhile, digitalization and fintech made bank runs a simple matter at times of crisis.

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How buy now, payer later apps could be crushing your credit

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Small, everyday purchases like a meal from DoorDash are now able to be financed through eat now, pay later options — a practice that some experts deem “predatory.”

“You’ve got to have enough sense to not follow the urge to finance a taco, okay? You have got to be an adult,” career coach Ken Coleman told “The Big Money Show,” Wednesday. 

“This is predatory, and it’s going to get a lot of people in deep trouble.”

RISKS OF BUY NOW, PAY LATER: ‘TICKET TO OVERSPENDING,’ EXPERT SAYS

klarna, doordash

DoorDash and Klarna are now partnering up to extend buy now, pay later options to consumers. (Reuters, Getty / Getty Images)

Financial wellness experts are continuously sounding the alarm to cash-strapped consumers, warning them of the devastating impact this financial strategy could have on their credit score as some lenders will begin reporting those loans to credit agencies.

Consumers may risk getting hit with late fees and interest rates, similar to credit cards. 

“So your sandwich might show up on your FICO score, especially if you pay for it late,” FOX Business’ Jackie DeAngelis explained.

EXPERTS WARN HIDDEN RISKS OF BUY NOW, PAY LATER

Major players like Affirm, Afterpay, and Klarna have risen to prominence at a time when Americans continue to grapple with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic. 

“The Big Money Show” co-host Taylor Riggs offered a different perspective, suggesting that company CEOs have a “duty” to attract as many customers as they want. 

“Unfortunately for me, this always comes down to financial literacy — which I know is so much in your heart about training people to save now by later,” she told Coleman, who regularly offers financial advice to callers on “The Ramsey Show.”

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Coleman continued to come to the defense of financially “desperate” consumers, arguing that companies are targeting “immature” customers. 

“I’m for American businesses being able to do whatever they want to do under the law. That’s fine. But let’s still call it what it is: it’s predatory, and they know who their customers are,” Coleman concluded, “And I’m telling you, they’re talking about weak-minded, immature, desperate people.”

FOX Business’ Daniella Genovese contributed to this report.

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