Warren Buffett Reduces Berkshire's Bank of America Holdings by 34% and Invests in a Popular Consumer Brand with a 7,600% Surge Since Its IPO

While Wall Street boasts numerous billionaire money managers, few attract the intrigue of both professional and casual investors quite like Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) CEO, Warren Buffett.

Investors are drawn to the “Oracle of Omaha” for two key reasons. Firstly, Buffett has consistently outperformed the S&P 500, achieving remarkable success since he took the helm at Berkshire Hathaway over sixty years ago. The S&P 500 has yielded an impressive total return of 40,633%, including dividends, since the mid-1960s; in contrast, Buffett has guided his company’s Class A shares (BRK.A) to an astonishing cumulative return of more than 5,815,000% as of February 14’s market close.

Secondly, Buffett’s transparency and open-book approach resonate with investors. Whether addressing a crowd of 40,000 at Berkshire’s annual meeting or penning his annual letter to shareholders, Buffett readily shares the traits he seeks in exceptional companies.

However, there are additional opportunities to glean insights from Warren Buffett’s approach.

Warren Buffett joyfully interacts with attendees at Berkshire Hathaway’s annual shareholder meeting. — Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

Within 45 days of each quarter’s end, institutional investors managing at least $100 million in assets are mandated to file a Form 13F with the Securities and Exchange Commission (SEC). This report, which was submitted on February 14, gives a revealing glimpse into the stocks that top Wall Street money managers have acquired or divested during the previous quarter. With Buffett managing nearly $299 billion in assets under Berkshire Hathaway, the filing offers investors an insightful look into his recent activities.

According to the latest report, Buffett has been actively selling shares in Berkshire’s third-largest holding, while simultaneously accumulating a stake exceeding $1.1 billion in a renowned consumer brand that has skyrocketed 7,600% since its initial public offering (IPO).

In 2024, no stock from Buffett’s portfolio has been sold as vigorously as Berkshire’s primary asset, Apple. However, Bank of America (NYSE: BAC) is not far behind. From July 17—marked distinctly by Form 4 filings with the SEC—up until December 31, Buffett facilitated the sale of 352,618,419 shares of BofA, which slashed his company’s holding by 34%.

During Berkshire’s annual meeting in May, Buffett hinted that the marginal corporate income tax rate might rise from its current level of 21%. He suggested that seizing substantial unrealized gains at a lower tax rate would likely be viewed favorably by Berkshire’s investors in hindsight. While his remark specifically referenced Apple share sales, the selling trend at Bank of America might be purely based on tax strategies.

However, Buffett may also have valid concerns prompting him to significantly reduce his company’s stake in BofA.

For instance, Bank of America’s sensitivity to interest rates can either drive success or pose challenges, depending on the Federal Reserve’s monetary policy. BofA was one of the largest beneficiaries when the central bank swiftly increased rates from March 2022 to July 2023. Yet, as the Fed begins a rate-reduction phase, a decline in BofA’s net interest income could become more evident.

Additionally, there are valuation apprehensions. Buffett’s initial investment of $5 billion in preferred BofA stock in August 2011 came when the common stock was trading at a 62% discount to book value. As of February 14, it now commands a 31% premium to book value. As a dedicated value investor, Buffett tends to withdraw from promising enterprises when a strong value proposition is absent.

It is important to note that Buffett has been a net seller of stocks for nine consecutive quarters. Although Bank of America’s shares are currently more expensive relative to their book value than they have been in the last decade, the overall stock market is priced at one of its highest valuations in 154 years. Buffett has been vocal about maintaining cash reserves in a landscape where opportunities for value are scarce.

Conference table filled with people enjoying pizza. — Image source: Getty Images.

Despite being a net seller of equities for nine consecutive quarters (from October 1, 2022, to December 31, 2024), the Oracle of Omaha has strategically deployed his company’s capital in select investments. One notable recent acquisition is the well-loved consumer brand, Domino’s Pizza (NASDAQ: DPZ).

As of June 30, Buffett’s firm owned no shares of Domino’s. However, by the end of 2024, Berkshire had acquired 2,382,000 shares, valued at over $1.1 billion.

Domino’s exhibits a characteristic Buffett values: trustworthiness. Over 15 years ago, Domino’s candidly acknowledged its shortcomings in a marketing campaign and laid out a plan for redemption. While such transparency can sometimes backfire, it has significantly boosted trust in the brand. Buffett champions companies with solid management teams and strong brands that cultivate consumer trust over the years.

Domino’s resurgence is also attributed to its innovative strategies, like the “Hungry for MORE” initiative launched in 2023. This comprehensive five-year strategy focuses on new product development and tech-driven operational efficiencies and leverages loyalty rewards and franchisees to enhance the Domino’s brand. Consequently, the company is seeing annual sales growth around 6%.

The strength of the Domino’s brand is evident in its international growth efforts. The latest third-quarter operating results suggest that the company is on track for its 31st straight year of international same-store sales growth, indicating a robust trajectory beyond U.S. borders.

Additionally, Domino’s boasts a solid capital-return program that Buffett often prioritizes in his investments. The company has consistently increased its annual dividend for over a decade and regularly repurchases its own shares. Such practices can bolster earnings per share (EPS) and attract fundamentally-focused investors, particularly for firms with steady or growing profits.

While Domino’s Pizza isn’t exactly a bargain—trading at 27 times the consensus EPS for 2025—Buffett has an exceptional understanding of consumer habits, potentially making it an appealing investment.

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Bank of America is a marketing partner of Motley Fool Money. Sean Williams holds positions in Bank of America. The Motley Fool has positions in and endorses Apple, Bank of America, Berkshire Hathaway, and Domino’s Pizza. You can review the disclosure policy for more details.

Billionaire Warren Buffett Sold 34% of Berkshire’s Stake in Bank of America and Is Piling Into a Beloved Consumer Brand That’s Soared 7,600% Since Its IPO was initially published by The Motley Fool

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