Brian Moynihan, CEO of Bank of America Corp. (NYSE: BAC), has praised Warren Buffett despite his recent decision to reduce the stake he holds in the financial services giant.
Moynihan, speaking at a global conference on financial services, expressed his appreciation for Buffett’s support during a crucial period for the company. Moynihan said:
He was a great investor in our company, and he stabilized us when needed.
He was referring Buffett’s investment of $5 billion in Bank of America following the global financial crisis.
This initial investment, which was split between preferred stocks and warrants, allowed the bank to regain its footing in a turbulent period.
Buffett’s longstanding relationship with Bank of America was solidified in 2017, when Berkshire Hathaway converted the warrants and became the bank’s largest shareholder.
Buffett added 300 million additional shares to his holdings in early 2019.
In recent months, the legendary investor has changed his strategy and begun to reduce his stake.
Buffett sells 5,8 million additional Bank of America shares
Apple was the largest holding in Berkshire Hathaway’s portfolio at the beginning of the year.
Buffett has sold 175 million shares, totaling $7.2 Billion, of the bank.
Berkshire Hathaway still holds around 858 millions shares of Bank of America, a stake that has fallen to 11.1% as of mid-September.
Moynihan, when asked to explain the reasons behind Buffett’s sale, admitted that he did not know the investor’s motives.
I don’t really know what he is doing because we can’t actually ask him. The market is absorbing this stock and life will continue.
Is Bank of America still a good buy?
Bank of America stock has been a good investment for years, despite Buffett’s recent sale.
When Buffett bought the stock for the first time in 2011, it was only $5.50 per share.
Today, shares hover around $40, reflecting his tremendous profit.
The stock is still up more than 20% from the lows of the year, despite a drop of over 10% from mid-July’s highs.
Piper Sandler analysts expect a further increase in net interest income.
Bank of America’s second-quarter earnings report reported a 3% drop in NII but also expressed optimism for future growth.
Bank of America is well positioned for long-term investment, especially with a current price of $42 and a dividend yield of 2.65%, particularly as the US faces possible economic challenges.
This post Bank of America’s CEO on Warren Buffett’s stock sale: “Life will go on” may be modified as new developments unfold.
This site is for entertainment only. Click here to read more
