Bank of America (NYSE:BAC) could come under further pressure after Warren Buffett dumped more of the company’s stock.
BAC – Weekly Chart
BAC shares are weaker on a weekly basis and a bearish close could target the support at $38.57, with further support at $35.
Warren Buffett’s Berkshire Hathaway conglomerate has been steadily reducing its stake in Bank of America shares over the past several months. Data from Bloomberg revealed that Berkshire sold millions more in recent days, taking its stake closer to the 10% regulatory threshold. Once it dips below that level, the company could sell all of its holdings without reporting it.
Before Berkshire started selling BAC shares in mid-July, Buffett’s firm held just over a billion shares. That stake has been reduced in just a few months to 814 million.
Buffet’s move seems timed to coincide with the Federal Reserve rate cut and he may see the bank as less favourable to absorb lower rates and reduced net interest income.
Berkshire Hathaway is still BofA’s biggest shareholder with a 10.5% stake in the banking major worth $32.13 billion. Earlier this month, BofA CEO Brian Moynihan praised Warren Buffett, saying he was a “great investor” who “stabilised” the company.
“I don’t know what exactly he is doing because, frankly, we can’t ask,” Moynihan told investors.
Buffett began investing in the bank in 2011 when his firm bought $5 billion worth of preferred stock, highlighting his confidence in Moynihan’s ability to restore the lender to its former glory following the 2008 financial crisis.
The Oracle of Omaha is well known for holding stocks over a long time frame and the recent selling hints that he sees negative sentiment on the horizon.
