Warren Buffett's Successor, Greg Abel, Appears to Have Sold Shares of Bank of America for a 7th Consecutive Quarter

Berkshire Hathaway's cost basis in "banks, insurance, and finance" fell from $15.454 billion to $14.685 billion in Q1, signaling continued selling in financial stocks under new CEO Greg Abel. The article highlights six straight quarters of Bank of America sales by Warren Buffett, totaling a 50% reduction in Berkshire's BofA stake since mid-July 2024. The takeaway is mildly negative for Bank of America and indicates a likely further trim despite the stock trading at a 43% premium to book value.

Analysis

The market is likely underestimating how much of Berkshire’s financials exposure is now a governance signal rather than a pure valuation call. If the new regime is pruning a historically core bank position immediately after succession, that creates a read-through for other large-cap financials: capital allocation discipline at Berkshire may be shifting from “own franchises forever” to “optimize optionality,” which can pressure sentiment around crowded quality-bank ownership more broadly.

For BAC specifically, the issue is not just multiple compression; it is that a major long-only anchor appears to be disappearing while the stock sits closer to book than the deep-discount entry point that originally justified a quasi-permanent hold. That matters because the next marginal buyer has to absorb both a slower growth profile and the possibility of continued holder overhang, which can cap upside even if fundamentals remain stable over the next 1-2 quarters.

The second-order winner may be non-bank financials and higher-beta capital markets names, where Berkshire-style capital redeployment would likely seek cleaner growth/return profiles than money-center banks. If this is part of a broader post-succession portfolio refresh, the signal to watch is not the 13F headline but whether the financials bucket continues to shrink in the next filing cycle; two consecutive trims would confirm a multi-quarter de-risking rather than a one-off rebalance.

Contrarianly, the move may be too easy to read as bearish on BAC when it is actually more about source-of-funds optimization than a deep negative on the franchise. That said, the stock likely needs a catalyst beyond “good-enough” returns to re-rate, and in the absence of a clearer credit or net-interest-income inflection, the path of least resistance over the next 1-3 months is range-bound to lower.

Key Decisions for Investors

• Short BAC against XLF for a 4-8 week tactical pair: thesis is ongoing holder-overhang and governance-driven de-risking outpacing sector beta; risk is a broad financials rally on rate-cut expectations.
• Reduce exposure to large-cap money-center banks and rotate toward capital markets/asset managers with cleaner fee leverage over the next 1-2 quarters; these should benefit if Berkshire-style capital flows favor higher-ROE optionality.
• Sell BAC calls against existing equity or initiate a collar into the next earnings cycle; the implied upside looks capped unless there is a surprise improvement in deposit costs or loan growth.
• Monitor the next Berkshire 13F and Q2 financials bucket: if the category declines again, add to the BAC underweight; if it stabilizes, cover the tactical short as the overhang thesis weakens.
• For investors needing bank exposure, prefer a relative long in regionals with less valuation stigma and more operating leverage versus BAC over the next 6-12 months.