Berkshire Hathaway now owns 981.6 million Bank of America shares worth around $ 24 billion.
Houston Cofield / Bloomberg
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Bank of America is Warren Buffett’s favorite bank.
Berkshire Hathaway (ticker: BRK.B) collected 33.9 million shares last week, paying around $ 810 million, or an average price of around $ 24 per share. The stock, which ended Friday at $ 24.35, a 5% increase for the week, is close to 31% this year and has lagged behind the stock market during the recovery from March lows.
Buffett had no comment, but is apparently comfortable with the stock valuation. Bank of America (BAC) is trading at a tangible book value 1.2 times, an industry leader JPMorgan Chase (JPM) discount of 1.6 times. The bank is more expensive based on earnings, trading 16 times projected 2020 earnings of about $ 1.50 per share.
Earnings are depressed by sizable provisions for bad loans. Buffett could be looking for potentially higher earnings in 2021, when the consensus is $ 2.15 a share. The stock yields almost 3%.
Berkshire now owns 981.6 million Bank of America shares worth around $ 24 billion, making it the company’s second-largest equity stake after Apple (AAPL). Buffett, CEO of Berkshire, has praised both the bank and its CEO, Brian Moynihan. Buffett is a big fan of bank stocks, with Berkshire holding stakes in Wells Fargo (WFC), JPMorgan, Bank of New York Mellon (BK), and US Bancorp (USB).
Berkshire now owns an 11.3% stake in Bank of America. Berkshire obtained approval earlier this year from the Federal Reserve Bank of Richmond to raise its stake above 10%, the normal limit for investor ownership in banks. After that point, purchases should be reported immediately. Buffett must like action because he prefers to keep his purchases and sell quietly as long as possible.
Write to Andrew Bary at [email protected]
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