Tuesday, February 15, 2011

Berkshire Hathaway Dumps Bank of America

Buffet to BofA: "Bye-bye."

Bloomberg has reported that Warren Buffett's Berkshire Hathaway Inc. sold the last 5 million shares of its stake in Bank of America Corp. during the quarter ending December 31, 2010, pulling the plug on a four-year investment that saw the bank's common stock lose two-thirds of its value. Disclosure of the exit came yesterday in a regulatory filing that lists the company's largest stockholdings. Berkshire, where Buffett serves as CEO and head of investments, had entered the BofA stake with a purchase of 8.7 million shares in Q2 2007.

"He's closing out a loser," said Jeff Matthews, who wrote Pilgrimage To Warren Buffett's Omaha and whose Ram Partners LP has invested in both Berkshire and Bank of America. "We bought it during the crisis. But its earnings power coming out of the crisis has been reduced." [Editor's note--try eliminated. The bank lost $2.23 billion in 2010.]

Another of the universe's super-investors, hedge-fund manager John Paulson, revealed in his 13-F filing that he sold three times as much BAC as Buffett did in Q4 2010, or nearly 15 million shares. And that was after dumping 30 million shares in Q3. That still leaves him with 123.9 million shares, but 27% fewer than six months earlier.

As of December 31, the MainePERS investment portfolio held 2,544,670 shares of BofA stock, basically unchanged from a year ago. Know when to hold 'em, know when to fold 'em.

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