By Tomi Kilgore, MarketWatch
Berkshire Hathaway owns more than 10% of Bank of America's shares outstanding to increase its lead as the largest shareholder
In a Form 3 filing with the Securities and Exchange Commission late Thursday, Berkshire Hathaway disclosed that it owned 950.0 million shares of Bank of America, or more than 10% of the common shares outstanding. Buffett is Berkshire's chairman and chief executive officer.
That's up from a previous disclosure of a 896.2 million-share stake (), or about 9.4% of the shares outstanding, as of March 31.
Berkshire has extended its lead as the Bank of America's largest shareholder. The Vanguard Group is the second largest shareholder at about 6.4%, followed by SSgA Funds Management Inc. at 4.1%, according to FactSet.
Bank of America's stock(BAC) surged 1.4% to $30.77 on Friday to close at a three-month high. At that price, Berkshire's stake would be valued at $29.23 billion. That is well above the value of Berkshire's second-largest bank holding, as the 409.8 million shares of Wells Fargo & Co.(WFC) it owns is currently worth about $20.20 billion. Berkshire's Class B shares(BRKA) tacked on 1.0% on Friday.
"The beneficial ownership of the shares of common stock reported herein exceeds 10% as a result of the issuer's repurchases of its own securities, based on the issuer's most recently announced number of shares of common stock outstanding," Berkshire stated in a Form 3 filing with the Securities and Exchange Commission. BofA's most recent 10-Q filing () said there were 9.51 billion shares outstanding as of April 25, but the bank said it bought back $6.5 billion worth of stock ( ) during the second quarter.
One way Buffett built his stake in BofA was by exercising warrants that were acquired as part of a deal announced in August 2011 (), in which he invested $5 billion in preferred stock that paid a 6% annual dividend at a time the bank was struggling to return to health in the aftermath of the 2008-2009 financial crisis. That dividend yield was nearly triple the yield on the 10-year Treasury note at the time.
Don't miss: How Buffett is set to make a cool $12 billion profit on a Bank of America wager ().
Also providing a boost to BofA shares, Keefe, Bruyette & Woods analyst Brian Kleinhanzl upgraded the bank to outperform from market perform, and raised his stock price target to $36 from $32, saying he expects the bank to benefit from an improved economic outlook after expected interest rate target cuts () by the Federal Reserve.
BofA's stock is little changed over the past three months through Friday, while the SPDR Financial Select Sector exchange-traded fund(XLF) has advanced 2.5% and the Dow Jones Industrial Average has tacked on 2.4%.
The following table shows Berkshire's common-share holdings of banks other than Bank of America as of March 31, according to Berkshire's latest 13F filing in May. The next 13F is due in mid-August.
Bank (ticker) Common share holdings Value at Friday's closing prices
Wells Fargo & Co. (WFC) 409,803,773 $20.20 billion
U.S. Bancorp (USB) 129,308,831 $7.42 billion
JPMorgan Chase & Co. (JPM) 59,514,932 $6.92 billion
Goldman Sachs Group Inc. (GS) 18,353,635 $4.08 billion
Bank of New York Mellon Corp. (BK) 80,937,250 $3.85 billion
M&T Bank Corp. (MTB) 5,382,040 $887.8 million
Berkshire Hathaway 13F filing on May 15
Berkshire's holding of Wells Fargo common stock has been declining, from 426.8 million shares as of Dec. 31, 2018 and 442.4 million shares as of Sept. 30, 2018.
-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
July 29, 2019 07:43 ET (11:43 GMT)
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