Warren Buffett Reduced His Bank of America (BAC) Position. Should You?

Here’s the scoop: Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) recently sold off about $850 million in Bank of America Corp. (NYSE: BAC) shares.

It’s the latest in a trend of selloffs since mid-July totaling about $5.4 billion. It is not yet known exactly why Berkshire Hathaway sold the shares, only that it is a reversal of Buffett’s position back in April of 2023, when he stated he did not wish to sell then.

Interestingly, this trend echoes fears about Apple Inc (NASDAQ: AAPL), of which Buffett’s Berkshire Hathaway has also been backing away from in the last year. Despite this, AAPL is up 16.96% over the last year, quickly rallying from a recent and short-lived selloff. BAC took a bit of a hit from late July to early August, but overall, the stock is up 40.07% over the last year. However, it is underperforming this year compared to the industry, only rising 20.8% compared to the industry’s 22.7%.

1-year chart for BAC, courtesy TradingView

However, it’s worth noting: Berkshire Hathaway is still the largest shareholder of Bank of America, holding about $35 billion in shares. There are no signs or statements saying this will change soon, even if the selloff trend continues at its current pace.

So, what is an investor to do in light of all this information?

One of the best ways to review how to look at BAC in light of this trend from Berkshire Hathaway is to check the fundamentals. And when we look at the Zen Score (our own shorthand for people to check the fundamental strengths and weaknesses of a stock), BAC does quite poorly, scoring only a 17, below the industry average of 35. Furthermore, when breaking it down, BAC doesn’t beat the industry average in any individual category.

What do top-rated analysts have to say? While none that we follow seemed to have directly reacted to Berkshire Hathaway’s BAC sale. Currently, the consensus among 17 analysts we track is Buy — see what they’re saying here. 

So. Should you follow Buffett’s lead and downsize on BAC shares? 

Ultimately, that decision is yours. However, there are tools to help you locate alternatives to BAC for your portfolio. If you’re looking for a banking stock to invest in, you might want to check out our Best Bank Stocks to Buy Now screener.

The Takeaway: It is ill-advised to take the investment actions of a single company or investor as a sign to make moves of your own without further information. Berkshire Hathaway’s BAC position is still sizable, and the company has performed well as of late. You should look at a broader range of options, market conditions, and opinions before deciding.

Still, other news could give you the information you need, and you would benefit from having all your information in one place. With WallStreetZen Premium, you can get access to that full set of information as well as get updates on BAC and any other stocks you’d like via your unlimited watchlist.

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