Berkshire Hathaway's BofA stake climbs above 10% amid bank's buybacks

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Berkshire Hathaway's stake in Bank of America crept above 10%, crossing a threshold that has caused the conglomerate headaches in the past, as the bank bought back its own stock.

Berkshire said Thursday in a regulatory filing that it owned 950 million shares in the lender, a holding that put it above a 10% ownership stake. The total was also higher than the approximately 896 million Bank of America shares that Berkshire reported owning in its most recent 13F filing.

Chairman Warren Buffett has said he aims to keep many of Berkshire’s equity stakes below that 10% threshold, which can sometimes come with increased regulatory scrutiny. At times, he’s bumped up against that level by mistake. His company applied to the Federal Reserve in 2016 for approval to keep expanding its stake in Wells Fargo after repurchases edged it over the line.

In some cases such as American Express, Berkshire has promised to be a passive shareholder. In 2017, he sought regulatory approval to push his stake in the credit-card issuer to as much as 24.99%.

If Berkshire wants to hold more than 10% of Bank of America, its application may reveal Buffett’s long-term strategy for the investment. When he applied to expand his Wells Fargo holding, he said Berkshire had no plan to merge Wells Fargo with another lender or make significant changes to its strategy or corporate structure.

Bank of America already ranked as Berkshire’s second-largest stock holding by market value at the end of the first quarter, right below Apple. Buffett’s assistant didn’t immediately respond to a request for comment. The Charlotte, N.C.-based bank said it appreciated Berkshire’s increased support.

Buffett might also win some relief soon as he manages the size of Berkshire’s bank stakes. The Fed has proposed tweaking how it determines whether an investment in a bank is deemed to be controlling. Barclays analysts led by Jay Gelb said in an April note that the proposed changes could help Berkshire expand its “already sizable” bets in the banking sector.

Bloomberg News