People around the world honor and respect Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) CEO Warren Buffett, so his sale of Bank of America (NYSE:BAC) shares, may induce you to panic-sell or just avoid Bank of America stock. That’s a mistake. There’s a lot of positive news to report about Bank of America.
Still, it’s worthwhile to track Buffett’s/Berkshire’s large-scale share sales. So, let’s delve into the dumpage now before we build a bull case for Bank of America.
Berkshire Unloads a Boatload of Bank of America Stock
So, here are the scary stats. Between July 30 and Aug. 1, Berkshire Hathaway reportedly sold roughly 19.2 million Bank of America shares for around $775 million. Of course, this means you need to immediately sell your Bank of America stock position – right?
Not really. When all was said and done, Berkshire Hathaway still held 942.4 million Bank of America shares. Berkshire is still Bank of America’s largest shareholder, owning 12.1% of Bank of America’s reported shares outstanding.
Thus, the 19.2 million share sale doesn’t represent a total liquidation, or anything close to that, for Berkshire Hathaway.
Just as importantly, Buffett hasn’t disclosed the reasons for Berkshire’s Bank of America stock sales. It’s not helpful to try to read Buffett’s mind and make guesses.
Instead, you can be like Buffett, meaning you can think for yourself and conduct thorough due diligence on companies like Bank of America.
Bank of America’s Many Positive Points
There are plenty of positive points for Bank of America right now. For one thing, the company observed increased adoption among businesses for its CashPro App.
By the middle of 2024, corporate payment approvals completed through the CashPro App surpassed $500 billion. That’s up by nearly 40% when compared to the middle of 2023.
Corporate payment approvals completed through the CashPro App are “on pace to reach a trillion dollars by the end of 2024.”
Second, Bank of America recently hiked its quarterly common-stock dividend payment by 8% to 26 cents per share. Also, the company’s board of directors authorized a new $25 billion common-stock repurchase program. This program became effective on Aug. 1.
That’s not enough good news for you? Then check this out. For the second quarter of 2024, Bank of America reported revenue of $25.4 billion, beating Wall Street’s consensus estimate of $25.2 billion.
Also during that quarter, Bank of America earned 83 cents per share, topping Wall Street’s consensus call for 80 cents per share.
Bank of America’s executives expect the company’s lending-segment income to improve in the second half 2024. Bank of America had a good second quarter and could have great third and fourth quarters.
Don’t Fret About Berkshire’s Bank of America Stock Sale
There’s no way to know for certain why Buffett and Berkshire Hathaway dumped million of dollars’ worth of Bank of America shares.
Just remember Berkshire is still a major Bank of America shareholder. Plus, there are multiple positive points to bolster the bullish outlook for Bank of America.
So, you can be like Buffett, and this doesn’t mean selling Bank of America stock. It means doing research on the company and thinking for yourself.
So, if you appreciate the company’s dividends, buybacks and solid financial results, feel free to pick up some Bank of America shares today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.