## Berkshire Hathaway Continues to Sell Bank of America Stock in 2024
Berkshire Hathaway has been actively selling Bank of America stock throughout 2024, with the trend expected to continue into 2025. The firm sold approximately $2 billion worth of shares from early September through October, further reducing its holding of BAC to under 10% of the stock. This reduction poses a significant issue as Berkshire is not required to report additional sales in a timely manner at this level, indicating a high likelihood of continued selling if the stock price rises.
### Berkshire Caps Gains in Bank of America Stock
The sales made by Berkshire Hathaway have played a role in capping gains in Bank of America stock, particularly evident in July when the firm’s selling activity coincided with the release of Q3 earnings. On this day, Berkshire made one of its largest sales, followed by another two days later. Despite Bank of America’s robust buyback figures in Q2, including a $3.5 billion repurchase of shares, Berkshire’s threshold of stake ownership poses a challenge. The buybacks could potentially push Berkshire’s stake above the 10% mark, triggering more timely reporting and leading to further sales to match company buybacks.
### Bank of America Institutional Activity Takes a Turn for the Worse
While analysts have been optimistic about Bank of America stock, institutional activity has taken a bearish turn. Institutions, which own 70% of the stock, shifted from buying in Q1 and Q2 to selling in Q3 and the first two weeks of Q4. This trend, coupled with Berkshire Hathaway’s selling, presents a significant headwind for the stock. Despite potential intraday price movements, a sustained uptrend is unlikely to occur under these circumstances.
### Consumer Credit Is Healthy But Trending in the Wrong Direction
One of the risks facing Bank of America and the banking sector is the quality of consumer credit. While lending activity has increased by 11%, the deterioration in credit quality is concerning. Delinquencies and charge-offs have risen compared to 2019, indicating a potential worsening trend. The Federal Reserve’s interest rate cuts may take time to positively impact consumers, with a slow cutting pace expected.
The top at $43 for Bank of America stock aligns with Berkshire Hathaway’s selling and the shift in institutional activity. If institutions continue to sell on balance, the stock is unlikely to move higher or sustain any upward momentum. A potential retreat to retest support levels near $38 or lower is a possibility in this scenario.
In conclusion, the ongoing selling activity by Berkshire Hathaway, coupled with bearish institutional trends and credit quality concerns, suggest a challenging outlook for Bank of America stock in the near term. Investors should exercise caution and consider the potential implications of these factors on their investment decisions.