Berkshire Asks to Expand Its Bank of America Stake

By Nicole Friedman

Warren Buffett's Berkshire Hathaway Inc. requested permission earlier this month from the Federal Reserve to increase its stake in Bank of America Corp. above 10%.

Berkshire typically tries not to own more than 10% of a bank to avoid additional Fed oversight. But the Omaha, Neb., conglomerate's holdings grew to slightly more than 10% in July after the bank repurchased shares.

The application underscores Mr. Buffett's positive outlook on Bank of America and on the U.S. banking sector more broadly. Berkshire held nearly $100 billion in financial-services stocks as of June 30, and six of its 10 top stockholdings were financial companies.

Berkshire said in its application that it might be interested in buying more Bank of America stock in the future and that it plans to continue being a passive investor in the bank.

"We have appreciated Berkshire's ownership for the past seven-plus years, " Bank of America spokesman Lawrence Grayson said.

Berkshire, whose application was earlier reported by Bloomberg, didn't respond to a request for comment.

Also on Tuesday, Berkshire reported in a securities filing that it sold off a small portion of its Bank of America shares last week in connection with a previously planned sale of one of its insurance companies.

In 2011, Berkshire bought preferred shares in Bank of America and warrants to buy common stock, shoring up investor sentiment at a time when the bank's health was in doubt. Berkshire exercised the warrants in 2017 for a gain of about $13 billion and became Bank of America's biggest shareholder.

Berkshire has previously received permission from the Fed to own as much as 25% of American Express stock and has committed to remain a passive investor in the company. Berkshire owned about 18% of American Express as of June 30, according to FactSet.

However, Berkshire said in 2017 that it would sell Wells Fargo shares as needed to keep its ownership below 10%.

The Fed proposed easing its restrictions on large bank investors earlier this year.

--Nick Timiraos contributed to this article.

Write to Nicole Friedman at nicole.friedman@wsj.com

(END) Dow Jones Newswires

October 15, 2019 20:47 ET (00:47 GMT)

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