An SEC filing published on October 10 revealed that Warren Buffett divested an additional $382.4 million worth of shares in Bank of America (NYSE: BAC).
The report included three transactions occurring between October 8 and October 10, during which Buffett sold a cumulative total of 9.54 million shares.
This latest round of selling follows Buffett’s earlier transaction on October 3, when he offloaded $337.9 million in BAC shares.
Currently, Berkshire Hathaway (NYSE: BRK.A) holds less than 10% of Bank of America, which means the holding company is no longer required to disclose its trades through Form 4 submissions, mandated to be filed within two business days. This change allows Buffett greater flexibility regarding his BAC holdings, though he must still report his holdings through regular 13-F filings.
Buffett trims BAC holdings amid a wider bank exit
While the market has shown keen interest in Buffett’s ongoing reduction of his BAC stake, leading to speculation that he predicts a substantial decline, a deeper examination of the situation does not necessarily support these theories.
Since 2020, Buffett has consistently decreased or completely divested from several bank holdings—similar to his actions with BAC, he has also exited positions in Goldman Sachs, JPMorgan, Wells Fargo, U.S. Bancorp, and BNY Mellon.
Buffett’s hesitance towards the banking sector is understandable given the current landscape—major stock market indices are hovering near all-time highs, uncertainty looms regarding the Federal Reserve and interest rates, and banks face stiff competition from fintech firms.
Concerns regarding Bank of America have yet to materialize as of now. At the time of writing, BAC’s stock price stands at $41.93, having seen a 7.50% increase over the past month, resulting in year-to-date (YTD) returns of 23.70%.
Analyst perspectives on BAC stock and future outlook
Despite Buffett’s recent sales, Wall Street analysts maintain a cautiously optimistic outlook for the stock. Of the 20 analysts assessing the stock, 12 have classified it as a ‘Strong Buy’, 2 marked it as a ‘Buy’, and 10 suggest a ‘Hold’ rating—there are currently no analysts advocating for a ‘Sell’ rating.
Price expectations are generally positive—with the average target predicting a stock price of $45.82 in a year, indicating a potential 9.45% increase. The most optimistic analysts project a price target of $52, representing a 24.16% potential rise.
Though BAC is navigating a challenging environment, the concerns surrounding its stock seem exaggerated. Investors and traders should monitor the upcoming earnings call scheduled for October 15, as it will yield significant insights for future evaluations.
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