An SEC filing released on October 10 disclosed that Warren Buffett has sold an additional $382.4 million worth of shares in Bank of America (NYSE: BAC).
The report detailed three transactions that took place between October 8 and October 10, during which Buffett sold a total of 9.54 million shares.
This recent series of sales follows Buffett’s earlier transaction on October 3, when he divested $337.9 million in BAC shares.
At present, Berkshire Hathaway (NYSE: BRK.A) owns less than 10% of Bank of America, which exempts the holding company from the obligation of filing Form 4 disclosures, typically required within two business days. This alteration provides Buffett with increased flexibility concerning his BAC stake, although he is still required to report his holdings through the standard 13-F filings.
Buffett reduces BAC stake amidst broader bank exit
While the market is closely watching Buffett’s ongoing decrease of his BAC investment, leading to speculation that he anticipates a significant downturn, a closer analysis does not necessarily lend credence to these theories.
Since 2020, Buffett has shown a consistent trend of reducing or fully exiting a number of bank investments—similar to his actions regarding BAC, he has also divested from Goldman Sachs, JPMorgan, Wells Fargo, U.S. Bancorp, and BNY Mellon.
Buffett’s cautious stance toward the banking sector is understandable given the current financial climate—major market indices are approaching record highs, there is uncertainty surrounding the Federal Reserve and interest rates, and banks are experiencing intense competition from fintech companies.
So far, concerns regarding Bank of America have not materialized. As of this writing, BAC’s stock is valued at $41.93, having increased by 7.50% in the last month, resulting in year-to-date (YTD) returns of 23.70%.
Analyst insights on BAC stock and future projections
Despite Buffett’s recent stock sales, analysts on Wall Street retain a cautiously optimistic view of the stock. Out of the 20 analysts evaluating the stock, 12 have designated it as a ‘Strong Buy’, 2 have classified it as a ‘Buy’, and 10 suggest holding onto it—none have assigned a ‘Sell’ rating.
Price projections are largely positive—the average target anticipates a stock price of $45.82 within a year, indicating a potential rise of 9.45%. The most bullish analysts foresee a price target of $52, suggesting a potential increase of 24.16%.
While BAC is facing a tough landscape, concerns about its stock appear to be overstated. Investors and traders are encouraged to keep an eye on the forthcoming earnings call set for October 15, which is expected to provide crucial insights for future assessments.
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