Bank of America Stock Dips Amidst Warren Buffett Sales
Bank of America (BAC) stock has experienced a noticeable decline as recent regulatory filings disclosed that Warren Buffett's firm, Berkshire Hathaway, sold a significant portion of its stake in the banking giant. According to a Securities and Exchange Commission (SEC) filing, Berkshire Hathaway offloaded approximately 5.8 million shares, with the selling price ranging between $39.29 and $39.67 per share. This selling activity took place from September 6 to September 10, resulting in a total sale of about 174.7 million BAC shares, valued at approximately $7.2 billion. As a result, Berkshire's holding in Bank of America has decreased to 858.2 million shares, making it the third-largest position in their equity portfolio, behind Apple (AAPL) and American Express (AXP).
Market Reactions and CEO Insights
During the Barclays Global Financial Services Conference, Bank of America CEO Brian Moynihan addressed questions regarding Buffett's selling actions. "I don’t know what exactly he's doing, because frankly, we can't ask him," Moynihan remarked. He added, "But on the other hand, the market's absorbing the stock." Berkshire's recent actions are part of a broader trend, as the firm has been reducing its BAC stake over recent months. Interestingly, Buffett also halved his position in Apple in Q2, citing tax considerations as the reason.
Analyst Opinions: Buy, Sell, or Hold?
Despite the recent sell-off, Bank of America has outperformed the broader market in 2024, achieving a 19% total return compared to the S&P 500's 16% gain. Many analysts remain optimistic about the financial stock. According to S&P Global Market Intelligence, the average target price for BAC is $45.53, suggesting a potential 20% upside. The consensus recommendation stands at Buy.
However, not all financial experts are fully convinced. CFRA Research, a notable financial services firm, maintains a Hold rating with a $39 target price for BAC stock. In an August 6 statement, CFRA analyst Kenneth Leon noted, "There has been no growth in loans and deposits for the last two quarters." Leon also highlighted concerns about BAC's card income, which has declined since late 2023, and pointed to the stress American consumers face due to inflation and living costs. Additionally, Leon suggests that other large banks might benefit more from investment banking than Bank of America. His price target aligns closely with BAC's current trading levels.
In conclusion, while some investors may see potential upside in Bank of America stock, others remain cautious due to economic uncertainties and mixed growth indicators.
