By Andrew Bary

Bank of America stock hit a record high Monday, part of a broad rally in bank stocks. But probably the biggest beneficiary was Berkshire Hathaway, the largest holder aside from two big index-fund investors.

Bank of America shares rose 2% Monday to $59.90, but the stock has lagged behind most of its peers during 2026 as well as over the past year and five years.

Still, the gain is welcome news for Bank of America holders who've seen the stock trail peers JPMorgan Chase, Morgan Stanley, Goldman Sachs Group and Citigroup. During the past year, Bank of America stock is up 22% against a 45% gain in Goldman Sachs, 53% for Morgan Stanley and 61% for Citigroup.

Bank of America has beaten its peers over the past month as investors have focused on some laggard bank stocks — like Bank of America.

At one point earlier this year, Bank of America's market value wasn't much higher than that of Morgan Stanley, which has a narrower franchise focused on wealth management, trading and investment banking. Bank of America has those businesses plus the country's No. 1 consumer bank. Investors had been favoring Morgan Stanley and Goldman Sachs as investment banking plays until a recent rotation.

The Invesco KBW Bank ETF — which holds the top bank stocks — gained 1.7% Monday and hit a new high.

Berkshire, meanwhile, held about 514 million shares of Bank of America at the end of March, a 7% stake worth about $32 billion assuming no change since then.

That would make it the No. 4 holding in Berkshire's $300 billion-plus equity portfolio behind Apple, American Express and Coca-Cola.

Unfortunately for its shareholders, Berkshire cut its holding in Bank of America in half over the past two years, probably at the direction of chairman Warren Buffett. Berkshire owned over a billion shares in mid 2024.

Berkshire at least holds a chunk of its original Bank of America stake. It fully unloaded big interests in JP Morgan, Wells Fargo and Goldman Sachs, mostly in 2020 and 2021, and probably left almost $50 billion in potential profits on the table given the surge in their stock prices since then. Berkshire sold its Goldman stake — some 18 million shares — at close to $200 a share, against the current price of about $1,055.

Berkshire is sitting on big profits on most of its Bank of America stake since it got about 70% of its peak holdings of about a billion shares from warrants — a long-term call option — for 700 million shares that it received when it invested $5 billion in a 6% preferred stock issue from the bank in 2011.

Bank of America CEO Brian Moynihan then was looking to shore up the bank's balance sheet and get the Buffett imprimatur. Bank of America's stock then traded poorly around $7, little more than half its tangible book value. The portion of the Berkshire stake derived from the warrants has risen more than eightfold in value. The rest of it has probably doubled.

Barron's wrote at the time in 2011 that "the allure of the Bank of America deal fo r Berkshire isn't the preferred stock but the cheap warrants." We were right since Berkshire exercised the warrants for a roughly 7% holding, paying $5 billion, or about $7 a share. Moynihan got the Buffett endorsement but it proved costly to the bank.

Barron's wrote in 2024 that Berkshire might stop selling Bank of America stock when it got down to 700 million shares — the original stake — given adverse tax consequences from selling low cost-basis stock. But Berkshire continued to sell, although it seems content to hold about 500 million shares. Berkshire got a price in the $40s for most of the Bank of America stock that it has sold in the past two years, meaning it has left money on the table.

Most of Berkshire's equity sales since 2020 — notably a roughly 80% reduction in its Apple stake to about 228 million shares — haven't been well timed given the extended bull market. Apple shares, which finished Monday at $312, probably are more than 50% above the average price that Berkshire received for selling down its stake, Barron's estimates.

Write to Andrew Bary at andrew.bary@barrons.com

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