News about Bank of America

After Warren Buffett retired as CEO on Dec. 31, Greg Abel took over day-to-day operations at Berkshire Hathaway and its $363 billion investment portfolio. In the first quarter, Abel exited 16 stocks and trimmed six others, including Bank of America (BAC). Since July 2024, Buffett and Abel have together sold over 549 million BofA shares, or 53% of a 1.03-billion-share position. Earlier, the stock looked vulnerable because of its premium to book value, its sensitivity to Fed rate cuts, and Abel's omission of BofA from his shareholder letter. However, after third-quarter results BofA trades at only a 30% premium to book value, and the Fed's rate-hiking cycle began on Sept. 16, which could boost its net interest income, so the narrative is shifting.

After Warren Buffett retired on Dec. 31, Greg Abel took over the day-to-day operations and the $363 billion investment portfolio at Berkshire Hathaway, disposing of 16 stocks in the first quarter and paring six others. Buffett and Abel have collectively sold more than 549 million Bank of America shares since July 2024, or 53% of a 1.03-billion-share position. Earlier, three factors suggested BofA might exit the portfolio: its valuation premium to book value, its high sensitivity to interest rates among money-center banks, and its omission from Abel's letter on companies that can compound for decades. The article argues these factors have reversed: BofA now trades at only a 30% premium to book value after its third-quarter results, and the Fed began only its fourth rate-hiking cycle of the century on Sept. 16, which should benefit BofA's net interest income.