In the selling frenzy that began in mid-July, Warren Buffett's Berkshire Hathaway (BRK.A.US) has reduced its stake in Bank of America (BAC.US) to below 10%.

In a filing with the U.S. Securities and Exchange Commission (SEC) on Thursday evening, Buffett disclosed the sale of more than 9.5 million shares in three transactions from Tuesday to Thursday. This move reduced his holdings to 775 million shares, representing approximately 9.987% of the total.

As the current stake is now below the critical threshold of 10%, Berkshire Hathaway no longer needs to report its related transactions promptly. It is understood that the SEC requires shareholders holding more than 10% of a company's equity securities to report transactions involving the company's equity within two working days.

This will make it difficult for market observers to detect the next moves of the "Oracle of Omaha" for a period of time. To understand the situation, one can only wait for the next 13F filing in mid-November, which will disclose Berkshire Hathaway's equity holdings as of the end of September. Currently, Berkshire Hathaway remains the largest institutional investor in Bank of America.

Despite Berkshire Hathaway's sale of Bank of America shares, the bank's stock price has still risen slightly by about 1% over the past month. Bank of America CEO Brian Moynihan previously stated that the market is absorbing these shares with the help of the bank's own buybacks.

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Buffett purchased $5 billion worth of preferred shares and warrants in Bank of America in 2011 to boost investor confidence in the troubled bank following the subprime mortgage crisis. He converted the warrants into common shares in 2017, making Berkshire Hathaway the bank's largest shareholder. Buffett added another 300 million shares in 2018 and 2019.

"Very cautious"

Before the recent sale of Bank of America shares, Buffett has been selling various long-held banking stocks in recent years, including JPMorgan Chase (JPM.US), Goldman Sachs (GS.US), Wells Fargo (WFC.US), and U.S. Bancorp (USB.US). Last year, Buffett expressed a pessimistic view of the banking crisis in 2023.

Buffett said: "You have no idea what has happened to the stickiness of deposits. By 2008, things had changed. This has changed everything. In this situation, we are very cautious about our ownership of banks."

Buffett believes that the bank failures during the global financial crisis in 2008 and in 2023 have eroded confidence in the system, and the poor messaging from regulators and politicians has made the situation worse. At the same time, digitalization and financial technology have made it easier for banks to operate during crises.