The move to decrease its holdings in Bank of America suggests a shift in strategy, while the decision to invest in Constellation Brands indicates confidence in the company's future prospects. This latest development underscores the dynamic nature of the investment landscape and Berkshire Hathaway's adaptive approach to navigating market opportunities.
Warren Buffett's Berkshire Hathaway persisted in selling its significant Bank of America stake in the fourth quarter while making a new investment in Constellation Brands.
Berkshire's Stake in Bank of America
In the last quarter, Berkshire offloaded over 117,000 shares of Bank of America, holding an 8.9% stake valued at just under $30 billion by the end of 2024, as per a recent regulatory filing.
Buffett's Selling Spree
Buffett initiated a selling spree in July after turning pessimistic about the industry post the 2023 banking crisis.
Berkshire's Bank Stock Sales
Bank of America was not the sole bank stock Berkshire sold last quarter. The conglomerate also divested more than 70% of its Citigroup stake and reduced its Capital One Financial holding by 18%.
Investment in Constellation Brands
During the fourth quarter, Berkshire acquired a relatively small stake in Constellation Brands, owning 5.6 million shares worth $1.2 billion by the end of 2024.
Market Reaction to Constellation Brands Investment
Following the disclosure of Berkshire's new investment, shares of Constellation Brands surged by more than 6%.
Concerns Over Constellation Brands
Constellation Brands faced recent pressure due to President Donald Trump's heavy tariffs on Mexican imports, which could significantly impact the brewer as it imports all its beer from Mexico, including Modelo and Corona. Beer sales constituted 86% of Constellation's revenue in the first half of its fiscal year, and the stock has dropped by 26% this year.
