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Warren Buffett Just Spent Another $800 Million on This Bank Stock

By Matthew Frankel, CFP® – Jul 23, 2020 at 9:41AM

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Buffett's largest bank investment just got larger.

Berkshire Hathaway (BRK.A -0.97%) (BRK.B -0.81%), the conglomerate led by CEO Warren Buffett, just bought another 34 million shares of Bank of America (BAC -1.32%) stock.

Buffett and his team bought the shares for an average price of just under $24 earlier this week, which translates to more than $800 million invested. This brings Berkshire's stake in Buffett's largest bank stock holding to 11.3% of the company. Bank of America is Berkshire's second-largest stock position, with a total market value of $23.9 billion.

Warren Buffett greeting investors.

Warren Buffett. Image source: The Motley Fool.

Is Buffett buying other bank stocks right now?

One important thing to know is that the only reason we know about the recent Bank of America purchases is that Berkshire's stake is over 10% of the company, an ownership threshold that comes with increased reporting requirements.

Berkshire owns shares of several other large banks, but most are well below the 10% threshold. The company owns just 1.9% of JPMorgan Chase (JPM -1.70%), 8.4% of Wells Fargo (WFC -0.76%), and 2.2% of PNC Financial (PNC -0.57%). And we won't get a comprehensive look at Berkshire's stock portfolio for some time. We'll get a snapshot of what Buffett and his stock pickers did in the second quarter in mid-August, but as far as any investments made in July go, we'll have to wait for the third-quarter SEC filings, which won't be released until November.

Even so, this week's Bank of America investment is likely to be taken as a positive sign by investors in the bank -- as well as Berkshire. In the case of Bank of America, it appears to still be Buffett's favorite bank stock. And for Berkshire, investors have been patiently waiting for Buffett to start deploying the $137 billion on its balance sheet, and between this and the recent Dominion (D -5.08%) natural gas asset acquisition, it looks like it could finally be happening.

Matthew Frankel, CFP owns shares of Bank of America and Berkshire Hathaway (B shares) and has the following options: short October 2020 $20 puts on Wells Fargo. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$30.66 (-1.32%) $0.41
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$406,700.00 (-0.97%) $-4,004.98
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$269.58 (-0.81%) $-2.20
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$106.16 (-1.70%) $-1.83
Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$40.50 (-0.76%) $0.31
The PNC Financial Services Group, Inc. Stock Quote
The PNC Financial Services Group, Inc.
PNC
$150.73 (-0.57%) $0.86
Dominion Resources, Inc. Stock Quote
Dominion Resources, Inc.
D
$71.06 (-5.08%) $-3.80

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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