Billionaire Warren Buffett sold 41% of Berkshire’s stake in Bank of America and it has become a cyclical company whose shares have soared 42,400% since its IPO.
Billionaire Warren Buffett sold 41% of Berkshire’s stake in Bank of America and it has become a cyclical company whose shares have soared 42,400% since its IPO.
13F forms provide a concise way for investors to track which stocks Wall Street’s smartest money managers are buying and selling.
Profit taking may explain only part of the story behind Warren Buffett’s persistent selling of Bank of America stock.
Meanwhile, an industrial stock with recurring revenue streams has clearly piqued the interest of Berkshire Hathaway’s billionaire boss.
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In just under two months, Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) Billionaire CEO Warren Buffett will step away from overseeing daily operations and hand the reins to Greg Abel. It will be a bittersweet moment for Wall Street and Berkshire shareholders, as the Oracle of Omaha has overseen a cumulative return of more than 5,750,000% on his company’s Class A shares (BRK.A) since taking control in 1965.
Even though Buffett’s time at the helm is coming to an end, he hasn’t stopped making or overseeing big investment moves in the trillion-dollar company he helped build.
No later than 45 calendar days after the end of a quarter, institutional investors with at least $100 million in assets under management must file Form 13F with the Securities and Exchange Commission. A 13F shows a clear picture of what stocks Wall Street’s smartest money managers have been buying and selling. Arguably no 13F filing is more anticipated than Berkshire Hathaway’s.
Warren Buffett, CEO of Berkshire Hathaway. Image source: The Motley Fool.
If we look at Berkshire’s last four 13Fs (covering the period from July 1, 2024 to June 30, 2025), clear trends emerge. Specifically, Buffett has been persistently reducing his company’s once gigantic stake in bank of america(NYSE: BAC)all while accumulating into a large-cap cyclical stock, which has generated astonishing returns since its initial public offering (IPO).
As of mid-2024, Bank of America (commonly known by its abbreviation, “BofA”) was Berkshire’s second-largest holding by market value. The Oracle of Omaha company owned more than 1.03 billion BofA shares.
There is no sector of the market that Warren Buffett understands better or prefers to invest in more than financials. It astutely recognizes that cyclical businesses (such as banks) benefit from the disproportionate nature of business cycles. Periods of economic growth that last considerably longer than recessions allow financial institutions to expand their loan portfolios and prosper in lockstep with the U.S. and global economy over time.
But over the past four quarters, Buffett has had no qualms about reducing his company’s exposure to BofA stock. During this timeline, 427,584,631 shares have been sold, representing 41% of Berkshire Hathaway’s stake in the company, as of the end of June 2024.
It is quite possible that this persistent selling activity represents nothing more than Warren Buffett’s desire to lock in profits with an advantageous corporate income tax rate. During Berkshire Hathaway’s 2024 annual meeting, Berkshire’s billionaire boss alluded to the prospect of the top marginal corporate income tax rate rising in the future as justification for selling his company’s stake in Apple. While Bank of America was not mentioned, it represents one of Berkshire’s significant unrealized investment gains.
But profit-taking may only partly explain why Berkshire’s 41% stake in BofA was sold in 12 months.
Among the largest monetary central banks in the United States, Bank of America is the most sensitive to changes in interest rates. When the Federal Reserve aggressively fought rapidly rising inflation and raised the federal funds rate by 525 basis points from March 2022 to July 2023, no large bank enjoyed a bigger rebound in net interest income than BofA.
However, the country’s central bank is now decisively in a rate-easing cycle, with another 25 basis point reduction to the federal funds rate enacted last week. As rates fall, there is a chance that Bank of America’s results could be disproportionately affected compared to its other big banking peers.
Additionally, the Berkshire boss is very rigorous when it comes to stock valuations. When Buffett orchestrated a deal in August 2011 in which Berkshire Hathaway provided $5 billion in capital to shore up BofA’s balance sheet in exchange for $5 billion in BofA preferred stock, Bank of America’s common stock was trading at a 68% discount to its book value. As of October 29, BofA shares had risen as much as 39%. premium at its book value.
It’s no longer the simple business it once was, which may be prompting Warren Buffett to reduce his company’s exposure.
Image source: Getty Images.
It’s true that Bank of America isn’t the only stock whose valuation or premium has risen in recent years.
The stock market, as a whole, is in rarefied territory. The aptly named Buffett Indicator, which divides the aggregate value of all publicly traded stocks by U.S. gross domestic product (GDP), hit an all-time high last week, while the S&P 500Shiller’s P/E ratio is at its second-highest multiple when backtested 154 years.
Between October 1, 2022 and June 30, 2025, the Berkshire boss has been a net seller of shares in all 11 quarters, for a cumulative sum of $177.4 billion.
Despite this net sales activity, there’s one stock that Berkshire’s soon-to-retire CEO hasn’t been able to stop buying: distributor of pool supplies and related equipment. Swimming pool corporation.(NASDAQ: POOL). Berkshire’s 13Fs detail purchasing activity for four consecutive quarters:
Third quarter of 2024: 404,057 shares purchased
Fourth quarter of 2024: 194,632 shares purchased
First quarter of 2025: 865,311 shares purchased
Second quarter of 2025: 1,994,885 shares purchased (3,458,885 total shares owned)
The principles that have historically attracted the Oracle of Omaha to buy financial stocks also come into play with industrial stocks like Pool. Since the end of World War II, the average recession in the United States has resolved within 10 months, while the typical economic expansion has lasted about five years. A cyclical business like Pool Corp., which provides solutions to consumers and professionals who maintain pools and spas, will spend more time under the sun than under the proverbial clouds.
Pool Corp. also offers recurring sales and fairly predictable operating cash flow quarter after quarter. Once a homeowner or business installs a pool or spa, they will need maintenance and repair products to keep it in good working order.
Additionally, Pool is thinking outside the box and trying to shore up its margins by looking beyond traditional retail sales. Its Pool360 platform serves as an online marketplace for its products, as well as a software platform for professional technicians to market their business, optimize scheduling, and automate billing, among other tasks.
To top it all off, Pool Corp. offers a healthy capital return program, including a steady dose of dividends and share buybacks. Including its dividend, Pool shares have risen more than 42,400% since its IPO in mid-October 1995.
Although President Donald Trump’s tariffs have introduced a level of uncertainty into the US economy that has the potential to weigh on cyclical companies like Pool in the near term, Berkshire’s billionaire boss clearly sees value and clear-cut competitive advantages in this company.
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Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions at Bank of America. The Motley Fool has positions and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
Billionaire Warren Buffett sold Berkshire’s 41% stake in Bank of America, becoming a cyclical company whose shares have soared 42,400% since its IPO. Originally published by The Motley Fool.
