8th Sept 2025 I've now exited my $BAC position, further details below. Ref: [[When to Sell - Lessons from Investment Legends#**Warren Buffett: Look for Fundamental Deterioration**]] ## Overall Sentiment The overall sentiment for $BAC is **mixed to cautiously bearish**. Retail investors show a split view, with some bullish on potential political tailwinds and rate cuts, while others are concerned by institutional selling and recent downgrades. Institutional investor activity, particularly from major "Super Investors" and company insiders, leans **bearish**, characterized by significant reductions in holdings and a complete absence of insider buying over the last six months. Fundamentally, BAC appears reasonably valued with solid profitability, but this doesn't seem to be translating into strong institutional buying conviction. ## Key Themes & Discussion Points 1. **Political & Regulatory Impact**: Discussions around potential deregulation under a new Trump administration and BAC's inclusion in a "pro-Trump" stock index. 2. **Interest Rate Environment**: The anticipated impact of Fed rate cuts on bank net interest margins. 3. **Institutional Investor Activity (especially Warren Buffett)**: Significant attention on Warren Buffett's (Berkshire Hathaway) continued selling of BAC shares. 4. **Bank Sector Risk & Downgrades**: Concerns stemming from Moody's downgrade of major US banks, including BAC, and historical memories of the 2008 financial crisis. 5. **Valuation & Dividends**: Discussions about BAC's current valuation and its appeal as a dividend stock. ## Retail Investor Sentiment (Social Media) ### Bullish Sentiment * **Political Tailwinds**: Some investors believe BAC is a "Likely Winner" if deregulation follows a potential Trump administration's "Trade War 2.0" policies. It's also included in a "Oligarch Index" of companies associated with Trump's campaign, which has reportedly outperformed the S&P 500. * **Rate Cut Beneficiary**: There's an expectation that BAC will benefit from Fed rate cuts (anticipated by Sept 2025), leading to net interest margin expansion, although smaller banks might see even greater gains. * **Existing Holdings & Gains**: Some users mention holding BAC as part of their diversified portfolios, having achieved "solid gains" on it previously, or including it in their long positions. * **Opportunistic Buying**: One user expressed interest in buying BAC calls if the stock drops post-JPM earnings, indicating a bullish outlook on a dip. * **Dividend Appeal**: BAC is mentioned in dividend-focused discussions, suggesting its dividend yield is attractive to some investors. ### Bearish Sentiment * **Warren Buffett's Sales**: A significant concern is Warren Buffett's (Berkshire Hathaway) large-scale selling of BAC shares. This is interpreted by some as a signal that BAC might be at its peak or that Buffett is accumulating cash for other opportunities. * **Moody's Downgrade**: Moody's downgraded BAC (along with JPM and WFC) due to weakened prospects of federal support following a US sovereign downgrade. While some comments suggested this was "priced in," it represents a negative news event. * **Bank Sector Risk**: The memory of the 2008 recession makes some investors wary of banks like BAC, viewing them as inherently risky. * **Negative Personal Experience**: One young investor reported selling BAC at a loss due to low risk tolerance. ## Institutional Investor Activity (13F Holdings) ### Current Holdings Bank of America Corp. ($BAC) is held by 16 "Super Investors," ranking 13th in ownership count, and represents 0.794% of all portfolios tracked by Dataroma. The average "Hold Price" for these investors is $47.32. Key institutional holders include: * **Warren Buffett - Berkshire Hathaway**: Holds 11.12% of his portfolio in BAC, valued at $28.64 billion. * **Li Lu - Himalaya Capital Management**: Holds 18.36% of his portfolio in BAC, valued at $493.61 million. * **Viking Global Investors**: Holds 4.27% of its portfolio in BAC, valued at $1.48 billion. * **Dodge & Cox**: Holds 0.54% of its portfolio in BAC, valued at $589.46 million. ### Recent Activity Institutional activity over the past year (Q2 2024 to Q2 2025) shows a predominant trend of **reductions** by many major holders. * **Q2 2025**: Significant reductions were made by Li Lu (-24.66%), Warren Buffett (-4.17%), Richard Pzena (-20.62%), Lee Ainslie (-12.28%), Dodge & Cox (-15.65%), and Kahn Brothers Group (-31.19%). On the buying side, Harry Burn (Sound Shore) made a substantial new "Buy" of 2.1 million shares (3.39% of portfolio), and Glenn Greenberg (Brave Warrior Advisors) added 82.58% (though on a smaller base). * **Q1 2025**: Continued reductions by Buffett (-7.15%), Li Lu (-23.42%), and Dodge & Cox (-34.25%). Viking Global Investors added significantly (+30.28%), and Lee Ainslie made a new "Buy" of 3.6 million shares. * **Q4 2024**: Mixed activity. David Katz (Matrix Asset Advisors) made a very large percentage add (+912.55% on a small base), and Viking Global added (+23.83%). However, Buffett continued reducing (-14.72%), as did Dodge & Cox (-42.01%) and Richard Pzena (-38.96%). * **Q3 2024**: Warren Buffett made a substantial reduction (-22.77%), and Duan Yongping (H&H International Investment) completely sold out. Viking Global Investors made a large "Buy" of 19.9 million shares. Overall, while some managers are adding or initiating positions, the most prominent and largest holders (e.g., Berkshire Hathaway, Himalaya Capital, Dodge & Cox) have been consistently reducing their exposure to BAC over multiple quarters, indicating a cautious stance or strategic profit-taking. ### Insider Trading Analysis Insider trading activity for BAC over the last 6 months is overwhelmingly **bearish**. * **Total Transactions**: There have been 0 insider buys and 24 insider sells, totaling approximately $3.9 billion in value. * **Key Sellers**: Berkshire Hathaway Inc., identified as a 10% owner, accounts for the vast majority of these sales. They executed numerous large-volume sales throughout September and October 2024, amounting to billions of dollars. * **Executive Sales**: James P. DeMare, President of Global Markets, sold 148,391 shares for $6.76 million on August 1, 2025. * **Absence of Buys**: The complete lack of insider buying transactions in the last 6 months, coupled with the significant selling, strongly suggests a lack of confidence or a strategic decision to reduce exposure by company insiders and major institutional affiliates. ## Financial Metrics & Valuation Analysis ### Key Valuation Metrics * **Market Capitalization**: Currently $368.64 billion. * **P/E Ratio**: Trailing P/E is 14.60, and Forward P/E is 11.78. These ratios suggest BAC is reasonably valued compared to the broader market, and potentially undervalued based on forward earnings. * **PEG Ratio (5yr expected)**: 1.25. This indicates that growth is priced in, but not excessively, as a PEG ratio around 1 is often considered fair value. * **Price/Sales (P/S)**: 3.71. * **Price/Book (P/B)**: 1.34. This is slightly above book value, which is common for profitable banks, but not indicative of extreme overvaluation. ### Profitability & Growth * **Profit Margins**: Profit Margin (ttm) is 28.51%, and Operating Margin (ttm) is 30.91%, indicating strong operational efficiency. * **Revenue**: Total Revenue (ttm) is $98.46 billion, with a Quarterly Revenue Growth (yoy) of 4.20%. This shows modest but positive top-line expansion. * **Earnings**: Net Income (ttm) is $26.59 billion, and Diluted EPS (ttm) is $3.41. Quarterly Earnings Growth (yoy) is 3.20%, suggesting steady, albeit not rapid, earnings improvement. * **Returns**: Return on Assets (ttm) is 0.84%, and Return on Equity (ttm) is 9.46%. The ROE is decent for a large bank, reflecting effective use of shareholder capital. ### Financial Health * **Liquidity**: Total Cash (mrq) is $838.14 billion. * **Debt**: Total Debt (mrq) is $819.27 billion. These high figures are typical for a bank, where deposits are liabilities and loans are assets. * **Debt to Equity (FQ)**: 2.57. This ratio is specific to the banking sector and reflects its unique balance sheet structure. * **Current Ratio (FQ)**: 0.98. A current ratio below 1 is common for banks due to the nature of their assets and liabilities. * **Dividends**: Forward Annual Dividend Yield is 2.25%, with a Payout Ratio of 30.50%, indicating a sustainable dividend. ### Industry & Peer Comparison Bank of America Corporation operates in the "Financial Services" sector, specifically within "Banks - Diversified." Peers listed include JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC), and Citigroup Inc. (C), among others. While direct comparative valuation metrics for these peers are not provided in the data, BAC's P/E (14.60) and P/B (1.34) ratios appear to be in line with what one would expect for a large, well-established bank in the current market. Its profitability metrics are solid for the industry. ### Valuation vs Sentiment Comparison Fundamentally, BAC appears to be **reasonably valued** with strong profitability and modest growth, offering a sustainable dividend. This contrasts with the **cautious to bearish sentiment** observed among institutional investors and insiders, who have been consistently reducing their positions. Retail sentiment is more mixed, with some seeing value and growth catalysts, while others are swayed by institutional selling and broader sector risks. The divergence suggests that while the company's financials are sound, professional investors may perceive limited upside potential, increased regulatory/economic headwinds, or simply believe the stock is fully priced, leading them to take profits or reallocate. ## Retail vs Institutional Comparison There is a clear **divergence** between retail sentiment and institutional actions. * **Institutional investors** (especially large funds like Berkshire Hathaway and Himalaya Capital, and company insiders) are predominantly **bearish or cautious**, evidenced by consistent, large-scale selling and no insider buying over the last six months. This suggests a strategic reduction of exposure, profit-taking, or concerns about future performance not immediately apparent in the fundamental metrics. * **Retail investors** exhibit a **mixed sentiment**. While some are influenced by Buffett's sales and the Moody's downgrade, others remain optimistic, citing potential political benefits (deregulation, "Oligarch Index" outperformance) and the positive impact of anticipated Fed rate cuts. There's also a segment of retail investors who hold BAC for its dividend or as part of a long-term, diversified portfolio. The institutional actions suggest a more conservative outlook compared to the more speculative or politically-driven optimism seen in parts of the retail community. ## Recent Catalysts & News * **Moody's Downgrade**: Moody's downgraded BAC, JPM, and WFC due to weakened prospects of federal support following a US sovereign downgrade (Post 4). * **Anticipated Fed Rate Cuts**: Expectations of rate cuts by September 2025 are seen as a positive catalyst for banks, potentially boosting net interest margins (Post 3). * **Trump's Policies**: The prospect of a new Trump administration and associated deregulation is viewed as a potential positive for regional banks, including BAC (Post 1). BAC's inclusion in the "Oligarch Index" also links it to potential political benefits (Post 22). * **Warren Buffett's Sales**: Ongoing news and discussion about Warren Buffett's continued reduction of his BAC stake has been a significant market signal (Post 18, 20). * **Upcoming Earnings**: BAC earnings are a focus for some short-term traders (Post 19). ## Risk Factors Mentioned * **Trade War Impact**: Potential for increased tariffs, China's retaliation (e.g., rare earth bans), and supply chain disruptions could negatively impact the broader economy and consumer spending, indirectly affecting banks (Post 1). * **Inflationary Pressure**: Tariffs could exacerbate inflation, making the Fed's job harder and potentially leading to hawkish policy that could hurt rate-sensitive stocks (Post 1). * **Bank Sector Volatility**: Historical risks associated with the banking sector, particularly recalling the 2008 financial crisis (Post 17). * **Weakened Federal Support**: The Moody's downgrade highlights concerns about the government's ability to support systemically important banks, potentially increasing borrowing costs and regulatory pressure (Post 4). * **Market Volatility**: General market downturns and large daily swings (Post 7, 8, 9). ## Community Sentiment Summary ### Reddit Reddit sentiment is **mixed**. There are bullish arguments centered on political shifts (deregulation, "Oligarch Index") and anticipated Fed rate cuts. However, significant caution is expressed due to Warren Buffett's ongoing sales and the Moody's downgrade. Discussions also touch on the inherent risks of the banking sector, recalling the 2008 crisis. Engagement on BAC-specific posts is moderate, with broader market/political posts mentioning BAC receiving higher scores. ### Twitter/X No clear information found. The provided data indicates "No items found" for Twitter/X mentions of $BAC. ### 13F/Institutional Institutional sentiment is **cautious to bearish**. Major "Super Investors" like Warren Buffett and Li Lu have been consistently reducing their positions in BAC over the past year. This trend is reinforced by the insider trading data, which shows zero insider buys and 24 insider sells (totaling $3.9 billion) over the last six months, with Berkshire Hathaway accounting for the vast majority of these sales. This suggests a lack of strong conviction or a strategic reduction of exposure among professional investors. ## Notable Posts & Sources 1. **Trump’s Trade War 2.0: The Stocks I’m Watching** (r/stocks): Highlights BAC as a potential winner from deregulation. URL: https://www.reddit.com/r/stocks/comments/1jeqaup/trumps_trade_war_20_the_stocks_im_watching/ 2. **Moody’s downgrades JPMorgan, Bank of America, Wells Fargo in blow to U.S. banks** (r/investing): Discusses a key negative catalyst for BAC. URL: https://www.reddit.com/r/investing/comments/1kr3p1m/moodys_downgrades_jpmorgan_bank_of_america_wells/ 3. **Investment Thesis: $BAC** (r/dividends): Focuses on Warren Buffett's sales and their implications for BAC's peak. URL: https://www.reddit.com/r/dividends/comments/1ff8bwh/investment_thesis_bac/ 4. **Warren Buffett’s Bank of America (BAC) Stock Sales Slow After Price Declines - Bloomberg** (r/wallstreetbets): Provides an update on Buffett's selling activity. URL: https://www.bloomberg.com/news/articles/2024-09-11/warren_buffett_s_bofa_stock_sales_slow_after_price_declines 5. **The Oligarch Index** (r/wallstreetbets): Mentions BAC as part of a politically-linked index showing strong performance. URL: https://www.reddit.com/r/wallstreetbets/comments/1hvd059/the_oligarch_index/