There was no shortage of important headlines in November. The 2024 election results pushed stocks to new highs; Overall, corporate profits were better than expected; and October’s inflation report did not upend the two-year bullish rally.

But in this flurry of data releases, investors may have overlooked perhaps the most important thing of all: the Nov. 14 deadline for filing Form 13F with the Securities and Exchange Commission (SEC).

Institutional investors with at least $100 million in assets under management must file a 13F filing no later than 45 calendar days after the end of the quarter. This form provides an overview of what stocks Wall Street’s largest money managers bought and sold in the most recent quarter (in this case, the September quarter).

When it comes to billionaire investors, no one gets more attention than Berkshire Hathaway‘S (BRK.A 0.12%) (BRK.B -0.01%) Warren Buffett is aptly named the “Oracle of Omaha.” If you’ve seen a cumulative return of more than 5,800,000% on your company’s Class A shares (BRK.A) since you took over as CEO nearly 60 years ago, you’re sure to gain a following.

However, no two billionaire asset managers think (or invest) alike. For example, Warren Buffett’s favorite stock that he bought in the third quarter, a popular consumer brand Domino’s Pizzawas dumped by eight other billionaire asset managers.

It’s not uncommon for brand-name companies to become billion-dollar battleground stocks – and that’s exactly what we’re seeing with financial institutions that specialize in money Bank of America (BAC 0.02%). While Buffett couldn’t hit the sell button quickly enough, billionaire Ole Andreas Halvorsen of Viking Global Investors repeatedly hit the buy button.

Warren Buffett is dumping more than a quarter of Berkshire’s BofA position

Even though the Oracle of Omaha is an unabashed long-term optimist and has warned investors against betting against America, what he does on shorter time frames doesn’t always align with his long-term message.

For eight consecutive quarters, Buffett and his team were key net sellers of $166.2 billion in stocks. While a significant portion of these sales come from top holdings AppleForm 4 filings with the SEC show that Berkshire Hathaway has sold more than 266 million shares of Bank of America stock since July 17. This represents total proceeds of around $10.5 billion and a reduction of around 26% in Berkshire’s stake in one of America’s leading money center banks.

A potentially benign reason for selling more than a quarter of Berkshire Hathaway’s second-largest holding by market value is tax implications. Buffett suggested during Berkshire’s annual shareholder meeting in May that the corporate tax rate would likely rise. He used this as a circuitous justification for making some profits from Apple. The idea is that taking profits at an advantageously low tax rate would subsequently be viewed positively by Berkshire shareholders.

However, there may be more to this selling activity than mere profit-taking or tax implications.

S&P 500 Shiller CAPE Ratio data from YCharts.

For example, the stock market is historically expensive, and Buffett’s persistent selling over the past two years appears to be a clear attempt to increase Berkshire Hathaway’s cash position in anticipation of an eventual downward move in stocks. The Buffett Indicator reached its highest level on record in November, while the S&P 500’s Shiller price-to-earnings (P/E) ratio, also known as the cyclically adjusted P/E (CAPE) ratio, is at its third highest Value during a continuous bull market, backtested over 153 years. It’s difficult to find value at the moment.

To build on this point: Bank of America stock is no longer the bargain it once was. When Buffett first invested in BofA preferred stock in August 2011, Bank of America was trading at a paltry 38% of its book value (i.e., a 62% discount to book value). At the closing bell on November 29, the shares were valued at 34%. premium to its listed book value.

The other potential concern for Warren Buffett and his top advisers Ted Weschler and Todd Combs is the prospect of falling interest rates. Measured by total assets, Bank of America is the most interest rate sensitive of America’s largest banks. While the strongest rate hike cycle in four decades, from March 2022 to July 2023, boosted BofA’s net interest income by billions of dollars, rate cuts are expected to have a negative impact on earnings per share (EPS).

Halvorsen’s Viking Global invested nearly $800 million in Bank of America

At the other end of the spectrum, billionaire Ole Andreas Halvorsen, who manages more than $27 billion at Viking Global Investors, can’t stop buying Bank of America shares.

During the September quarter, Halvorsen and his advisors initiated a position in BofA by purchasing 19,959,530 shares. On a cost basis, we’re talking about an investment of around $800 million, with Bank of America not owned by the company as of June 30th and Viking Global’s 12th largest holding as of September 30th. To be fair, Halvorsen is a big fan of financial stocks and has been getting into it lately visa And US Bancorpas well as.

The main appeal of financial stocks is that they are cyclical. Although economic downturns and recessions are an inevitable part of the business cycle, the non-linearity of this cycle benefits patient investors. Because growth phases continue clearly Because recessions last longer, bank stocks like BofA are able to prudently grow their loan portfolios over time, often increasing their book value in the process.

Halvorsen and his team are also likely optimistic about the Fed’s approach to the current rate-cutting cycle. Although lower interest rates are expected to have a negative impact on Bank of America’s interest income, the country’s central bank appears intent on slowing the rate-cutting process. The clearer the Fed is on its monetary policy actions, the better BofA can position its loan portfolio to optimize interest income collection.

Also, don’t forget the role that Bank of America’s capital return program has played in driving shareholder value. When the U.S. economy is firing on all cylinders and BofA passes the Fed’s annual stress test, it’s not uncommon for the company’s board to return more than $20 billion to shareholders through dividends and buybacks. Bank of America has reduced the number of shares outstanding by 27% over the past seven years, which has had a positive impact on the company’s earnings per share.

Bank of America has also done an excellent job of controlling costs. The aggressive investments in digital banking are allowing the company to close or consolidate some of its physical branches. Over the most recent three-year period (ending September 30, 2024), the share of credit sales enabled digitally increased from 43% to 54%.

Finally, there’s a good chance that banking regulations will remain somewhat relaxed under Donald Trump’s new administration, which is a positive for BofA.

Although Bank of America stock is not historically as expensive as the broader market, it has a valuation — 13 times forward earnings — where the upside potential over the next few years may be modest.